Shriram Transport surges on buzz of calling off merger with IDFC

Shriram Transport Finance Company jumped 5.63% to Rs 1,064 at 11:41 IST on BSE on reports that the company and IDFC decided to abandon the merger plan worked out in July this year.

IDFC (down 1.41% at Rs 59.30) and IDFC Bank (down 0.44% at Rs 56.95) edged lower.

Meanwhile, the S&P BSE Sensex was down 161.90 points or 0.51% at 31,437.86.

According to reports, Shriram Transport Finance Company (STFC) and IDFC decided to abandon the merger plan worked out in July this year as shareholder pressure and dilution fears forced them to examine a new, less complicated structure.

Fears of a sharp dilution in IDFC and IDFC Bank and protests by shareholders of STFC over the prospect of suffering 'holding company discount' have prevented the parties from continuing with the previous arrangement, reports indicated.

The boards of IDFC Group and Shriram Group had 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 companies had stated in a press release issued at that time.

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