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30
October 2017
 |
Unable
arrive at an acceptable structure and valuation, financial services majors IDFC
Group and the Shriram Group have decided to call off their merger proposal to
create a financial conglomerate, both announced on Monday.
In
a regulatory filing in BSE, IDFC said: "This is to inform you that despite
best efforts, IDFC Group and Shriram Group have not been able to reach common
ground on a mutually acceptable swap ratio for the merger."
Accordingly,
both parties have agreed to call off discussions on a potential merger and the
exclusivity period pursuant to the CES Agreement entered into between the
concerned parties stands terminated with immediate effect."
In
its filing with BSE, Shriram City Union Finance Ltd said: "Despite best
efforts by both Shriram and IDFC, we could not hit a common ground and arrive
at a mutually acceptable Structure and Valuation. Further, both Parties have
agreed for aborting any further discussions on the Proposed potential
combination. Consequently the 'Confidentiality, Exclusivity and Standstill
Agreement' entered between both the Groups stands terminated with immediate
effect."
The
two groups on July 8 had announced a possible merger and signed a 90-day CES
agreement and later extended for another 90 days.
The
merger was to create a "financial conglomerate", Shriram and Piramal
Group Chairman Ajay Piramal had then said.
According
to reports, some shareholders of IDFC and Shriram were not agreeable to the
valuation of the two groups.
The
two groups had entered into a confidentiality agreement to evaluate a potential
combination certain businesses and subsidiaries/affiliates and associate
companies of Shriram group with IDFC Group.
The
Shriram group, engaged in credit and non-credit (insurance) financial services,
has three listed entities - Shriram Asset Management Company Ltd, Shriram City
Union Finance Ltd and Shriram Transport Finance Company Ltd - operating in the
non-banking finance domain.
It
also has life insurance joint venture with South Africa's Sanlam and its own
general insurance company.
As
per broad scheme of merger announced between IDFC Group and Shriram Group, the
two insurance companies and listed Shriram Transport were to become
subsidiaries of IDFC. The other listed entity Shriram City Union Finance was to
be absorbed by IDFC Bank.
The
operating businesses of both the groups would have come under IDFC.
For
the Shriram Group, Shriram Capital Ltd is the overreaching holding company for
the financial services and insurance companies.The Total Investment & Insurance Solutions
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