IDFC, Shriram merger off over differences

MUMBAI: IDFC Ltd and Shriram Group on Monday called off their planned merger following differences over valuation. IDFC management said that it will continue to look at buying or merging with other non-banking financial companies at the level of IDFC Bank.

In a notification to stock exchanges, IDFC said that despite best efforts, the two entities were not able to find common ground on a mutually acceptable swap ratio for the merger.

“Accordingly, both parties have agreed to call off discussions on a potential merger and the exclusivity period pursuant to the CES agreement entered into between the concerned parties stands terminated with immediate effect,” the notification said. CES refers to confidentiality, exclusivity and standstill.

“The decision to call off the deal is good for the shareholders of both the entities as it would have been value destructive,” said Ashutosh Mishra, banking analyst at Reliance Securities.

Mint had reported on Monday that both parties are likely to terminate the exclusivity agreement, increasing the likelihood of the deal being called off.

IDFC and Shriram had announced their merger plan on 8 July, agreeing to a 90-day exclusivity period to complete the due diligence process. The exclusivity period was later extended until 8 November. Under a threetiered structure, the retail arm Shriram City Union Finance Ltd was to be merged with IDFC Bank Ltd; Shriram Transport Finance would become a fully owned unit of IDFC and be delisted; and IDFC would also become the holding company for the Shriram Group’s insurance businesses.