Content area
Full Text
Commenting on the merger announcement, MD of Kotak Mahindra Bank, a beaming Uday Kotak said "This is a momentous occasion that brings together two banking institutions with significant complementary strengths. The opportunities and synergies that this merger will create will place Kotak and its incoming stakeholders from ING Vysya on a new trajectory of excellence and leadership. I firmly believe this merger will pave the way for a bigger and better financial services player with deep Indian roots and global standards of service. Kotak values the diversity of ING Vysya, welcomes them as its family and will work towards integrating them smoothly on this exciting journey that is ahead ofus".
Introduction
On November 20, 2014, The Board of Directors of Kotak Mahindra Bank Ltd ("Kotak") and the Board of Directors of ING Vysya Bank Ltd ("ING Vysya") at their respective meetings have approved an all-stock amalgamation of ING Vysya with Kotak.
New shares will be issued to all the existing shareholders of ING Vysya in the ratio of 725 shares of Kotak for every 1000 shares of ING Vysya. The deal, the biggest in the Indian banking sector, created the fourth largest private bank in India with a balance sheet size of Rs. 2 trillion and market capitalization of over Rs. 1 trillion. It is believed that this deal would help Kotak to expand its presence in India and to compete with other topnotch private sector players in the Indian banking industry.
The Indian banking sector desperately needed such huge mergers to create world-class banks to compete with foreign banks. There is a need to create banks with a sufficient capital base to fund huge infrastructure projects crucial to maintain the growth of Indian economy.
Key Words: Merger, DCF Method, Purchase Method, AS-14, Amalgamation.
Mergers & Acquisitions in the Indian Banking Sector
After the first stage of nationalization in 1969, only 34 mergers took place in the Indian banking sector. In 26 of these deals, PSBs acquired private sector banks that were on the brink of failure, mostly on a directive from the RBI. The remaining 8 deals happened between private sector banks.
The merger immediately prior to the Kotak and ING Vysya merger in the private sector banking space took place in 2010...