Shareholders’ interest important in IDFC-Shriram merger: Ajay Piramal
MUMBAI: The interests of Shriram Group shareholders will be paramount in its merger with IDFC Ltd, said Shriram group chairman Ajay Piramal. Merger discussions may even be called off if the deal structure is not favourable to shareholders of the Shriram group companies, said Piramal, who is also chairman of Piramal Enterprises Ltd.
IDFC and Shriram announced their merger plans on July 8, 2017. The exclusivity period for discussions ends on October 6.
“It is very clear for us; we will do whatever is in the best interest of Shriram shareholders. All throughout, if you see, our record has been to look after the shareholder interest,” said Piramal in an interview. “We are aligned with all our shareholders and that’s what we will do. If it means extending it (exclusivity period), we will extend it. If it means discontinuing it, we will discontinue it and if it means setwhich tling it, we will do it do in a way it is right.”
The decision to extend the exclusivity period may be taken by October 6, said a person close to the development requesting anonymity.
According to the merger plan, the Shriram City Union was to be merged with IDFC Bank and Shriram Transport was to be delisted and made a wholly owned subsidiary of IDFC, was to act as the holding company of the merged entity.
The deal is facing some headwinds from shareholders of Shriram and IDFC, two other people involved in the negotiation said.
“The government of India has a substantial stake in IDFC. There could be concerns about the extent to which the dilution will happen,” one of these two people said. The government is the single largest shareholder in IDFC with a 16.38% stake.
The second person said that while the shareholders have not “openly” protested against the merger yet, the Shriram Group expects that the deal can upset shareholders of Shriram Transport as they currently hold shares in a niche listed firm focused on vehicle financing. The current merger proposal envisages delisting of the company and such shareholders would hold shares of a diversified financial services firm (what IDFC will become post merger).