BSE Says ‘Yes’ to USE Merger
The Bombay Stock Exchange (BSE) has agreed to merge United Stock Exchange (USE) with itself in a shareswap deal. Under the merger terms, a USE shareholder will get 1 share of BSE for every 385 shares held.
The merger will lead to dilution of around 3.2% for BSE. BSE currently holds 14.56% in USE and had invested .` 22 crore.
“More than size, I think it is positive for BSE in the way that both the exchanges can now look for synergy and a larger pie of business and consolidation,” Rajnikanth Patel, former BSE chief, told ET.
The deal comes as a relief to shareholders of the loss-making USE, which has seen a decline in turnover in the last many months. In May, USE has an average daily turnover of about .` 300 crore in the currency futures segment. On the National Stock Exchange, the average daily turnover in the currency segment is about .` 11,000 crore in May.
Securities and Exchange Board of India (Sebi) rules require exchanges to have a net worth of .` 100 crore at all times. USE's net worth had come down to Rs115 crore. Industry officials said USE may not have been able to sustain this above the threshold limit beyond a few quarters.
Banks held around 49% of USE's equity and private companies account for the remaining 51%. Its promoters include Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Federal Bank and HDFC Bank.