The merger talks between IDFC Bank and Shriram Capital has been called off due to differences over the valuation. IDFC Bank on Monday said that the two parties could not reach “common ground on swap ratio”, TV reports said. The announcement was made during a meeting held by IDFC to discuss its second-quarter earnings. “The CES agreement between the two parties stands terminated with immediate effect,” IDFC said.
In June, IDFC Bank and Shriram Capital had agreed to explore the merger aimed to create one of the country’s largest retail banks, which could be valued at over Rs 65,000 crore. However, both the parties failed to reach a consensus on valuation even after four months of negotiations.
According to the initial plan, Shriram Transport Capital was to remain a separate entity post-merger and all the other operating companies of Shriram Group was to merge into the bank and create a Rs 20,000-crore retail bank.
Shriram Transport Finance is the largest financier of commercial vehicles in the country, while Shriram City Union Finance is a leader in home, auto and personal loans. Both the companies are promoted by Shriram Capital, which is now headed by Piramal as chairman since 2015 when he invested around Rs 5,000 crore into the Chennai-based company.
Piramal Enterprises owns 20% stake in Shriram Capital and 10% each in Shriram Transport and the Shriram City Union. IDFC Bank, which started its banking operations in October 2015, is the seventh-largest private lender in terms of balance sheet.
