IDFC, Shriram group shares slide on merger plan

Shares of IDFC and Shriram Group companies were trading lower at 11:05 IST on BSE after Shriram group and IDFC unveiled their intent to merge the two entities.

IDFC was down 3.51%. IDFC Bank was up 1.08%. Shriram Transport Finance Corporation (down 6.64%), and Shriram City Union Finance (down 5.01%), edged lower.

Meanwhile, the S&P BSE Sensex was up 217.42 points, or 0.69% at 31,578.05.

The boards of IDFC Group and Shriram Group on 8 July 2017 approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination of certain businesses and subsidiaries / affiliates/associate companies of the Shriram Group engaged in the credit and non-credit financial services sector with the IDFC Group. The agreement primarily provides for a mutually agreed exclusivity period for due diligence and discussions between the relevant parties in relation to the potential combination.

The proposed potential combination would be subject to due diligence, definitive documentation and applicable board, shareholder, statutory/ regulatory and other third party approvals, as may be applicable.

According to media reports, IDFC will be the holding company of the merged entity. Shriram City Union Finance will be merged with IDFC Bank and Shriram Transport Finance will be a fully-owned subsidiary of IDFC, which will also own 75% of the life and general insurance arms of Shriram Capital.

Reports added that Shriram Group has a loan book of over Rs 80000 crore while IDFC and its banking arm IDFC Bank together have loan book of over Rs 60000 crore. The total assets of the merged entity will cross Rs 9 lakh crore.

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