By Nupur Acharya And Ian Walker
India's Kotak Mahindra Bank Ltd. on Thursday said it has agreed
to acquire its smaller rival ING Vysya Bank Ltd. in an all-stock
deal valued at $2.4 billion, which would create the country's
fourth largest private-sector lender by assets.
Kotak Mahindra Bank will offer 725 shares for every 1000 shares
of ING Vysya. The deal, which is subject to shareholder and
regulatory approvals, implies a price of $12.75 for every share of
ING Vysya, or a 16% premium to the bank's 30-day average share
price.
Dutch bank ING Groep NV, which owns 43% of ING Vysya, said that
it expects to book a net profit of EUR150 million ($188.01 million)
from the deal and that it will hold 7% in the combined entity.
"In line with ING's Think Forward strategy, the merger of Vysya
with Kotak will give ING a stake in a stronger bank with an
excellent long-term potential for sustainable profitable growth,"
it said.
The merger brings together two banks with complementary
strengths in businesses and reach, Uday Kotak, the executive vice
chairman of Kotak Mahindra Bank told reporters at a news
conference.
"We achieve an accelerated branch presence, which is key," he
said. The combined entity will have 1,214 branches with little
overlap. The merged bank is likely to start operations by April, he
added.
Kotak has deeper presence in the west and north of the country,
and a strong presence in segments such as corporations, agriculture
finance and consumer loans.
On the other hand, Bangalore-based ING Vysya has a large branch
network in southern India and a strong presence in small and
midsize business segments.
"It is a win-win deal," said Manish Ostwal, head of research
with Mumbai-based brokerage K.R, Choksey Shares & Securities
Ltd.
"Kotak has the ability to pull up the operating margins with
strong retail focus while ING Vysya has a strong asset book of
small and medium enterprises," Mr. Ostwal said.
The combined entity will better compete with big players such as
Axis Bank Ltd., India's third largest nonstate bank by assets, he
said.
ING Vysya's chief executive officer designate Uday Sareen will
be part of the top management and one of the bank's directors will
join the Kotak board.
India has had only a few bank mergers. In 2010, ICICI Bank Ltd.
acquired Bank of Rajasthan. Before that, HDFC Bank Ltd. acquired
Centurion Bank of Punjab in 2008.
Shares of both banks rallied on the Bombay Stock Exchange to
touch 52-week highs on reports that Kotak was in the final stages
of buying ING Vysya. Kotak shares closed at 1,157.05 rupees, up
7.28% while ING Vysya ended up 7.15% at 814.20 rupees.
Write to Nupur Acharya at nupur.acharya@wsj.com and Ian Walker
at ian.walker@wsj.com
Access Investor Kit for HDFC Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE040A01026
Access Investor Kit for ICICI Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE090A01013
Access Investor Kit for ING Vysya Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE166A01011
Access Investor Kit for Kotak Mahindra Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE237A01028
Access Investor Kit for Axis Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE238A01034
Access Investor Kit for ING Groep NV
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=NL0000303600
Access Investor Kit for Axis Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US05462W3079
Access Investor Kit for HDFC Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US40415F1012
Access Investor Kit for ICICI Bank Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US45104G1040
Access Investor Kit for ING Groep NV
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4568371037
Subscribe to WSJ: http://online.wsj.com?mod=djnwires