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United Western Bank to merge with IDBI
BS Reporter in Mumbai | September 12, 2006 19:42 IST
Last Updated: September 13, 2006 10:04 IST
In the process, IDBI bested a long line of suitors, including Canara Bank, ICICI Bank, Citibank, Standard Chartered Bank, and a consortium of HDFC and the State Industrial Investment Corporation of Maharashtra.
Since IDBI is adequately capitalised, it will not have to pump money into United Western Bank, which has a net worth of Rs 70 crore (Rs 700 million).
However, IDBI will have to pay United Western Bank shareholders Rs 150.55 crore (Rs 1.5 billion) at Rs 28 a share, which works out to a 31 per cent premium over United Western Bank's closing price of Rs 21.45 on the Bombay Stock Exchange on Tuesday.
Both banks have till September 27 to consider the amalgamation scheme. The board of United Western Bank is likely to meet on Wednesday or Thursday.
With United Western Bank in its kitty, IDBI's branch tally will swell to 425 from 195 now. The merger will also expand IDBI's asset base by Rs 7,166 crore (Rs 71.66 billion).
IDBI will have to open an 'asset account' for crediting the value of the assets of United Western Bank.
Reacting to the development, Maharashtra Chief Minister Vilasrao Deshmukh said, "We will discuss the issue in the Cabinet and decide on our course of action."
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