In a joint statement issued by Kotak Mahindra Bank and ING Vysya Bank on 20th of November, 2014, the amalgamation of these two private banks was announced in what is already being touted as one of the largest banking mergers and acquisitions in recent times. As a part of this mega merger worth $2.4 billion, Kotak Mahindra Bank is all set to acquire ING Vysya Bank in an all-stock deal which would arguably create the fourth largest private banking corporation in India.

1. Kotak-ING Vysya Merger Set
To Create Fourth Largest
Private Bank in India
In a joint statement issued by Kotak
Mahindra Bank and ING Vysya Bank on
20th of November, 2014, the
amalgamation of these two private
banks was announced in what is already
being touted as one of the largest
banking mergers and acquisitions in
recent times. As a part of this mega
merger worth $2.4 billion, Kotak
Mahindra Bank is all set to acquire ING
Vysya Bank in an all-stock deal which
would arguably create the fourth largest
private banking corporation in India.
The shareholders would receive 725
shares of Kotak Mahindra Bank against
1000 shares of ING Vysya Bank online
Online indian share market

2. according to the share-swap ratio and
expert valuations made by the
concerned parties. This would lead to 15
percent dilution for Kotak Mahindra
Bank, belying market expectations of
nearly 20 percent dilution. It should be
noted that ING Vysya shares are valued
at Rs 790 per share which is nearly
twice its estimated book value for FY15
which is considered fair valuation by
experts.
In anticipation of the deal, shares of
both the private banks surged on the
day of merger’s announcement by
nearly 7 percent each, although,
interestingly, the official announcement
of the merger came after the market
hours. The next day also, banking
stocks in general and stocks of these
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3. two banks in particular touched record
highs for the second successive day.
Considering the fact that this happens
to be the largest banking merger and
acquisition in India after the 2008 global
meltdown, the positive vibe in the stock
market can be well understood.
Here are some of the salient points
concerning this all-important deal which
is set to drive banking stocks higher at
least for a while:
1. The combined banking entity is
set to have 1,214 branches spread
across the India, which would offer
Kotak with strategic advantage
considering the fact that most of its
branches are concentrated in the
North and West India whereas ING
Vysya encompasses much of South
India. Additionally, Kotak can think of
online share trading in
india

4. leveraging the global outreach of ING
Vysya to its greater advantage in the
post-merger scenario.
2. On the other hand, the stake of
Kotak in the merged entity will come
down from current 40 percent to 34
percent with ING Vysya as the
second-largest shareholder with a
stake of 6.5 percent. It is notable that
currently ING Vysya holds a stake of
43 percent as a separate entity.
3. As per experts, the latest banking
acquisition has been finalized at a
price/book value ratio of 2:1 which is
quite a bargain. This is in stark
contrast to the 2010 acquisition of
Bank of Rajasthan by ICICI Bank in
2010 at nearly 5 times the price/book
value ratio and HDFC Bank and
Centurion Bank of Punjab merger at
online stock brokers india

5. about 6.8 times the price/book value
ratio.
4. It might also be worth noting that
whereas the combined profit of Kotak
Mahindra and ING Vysya for FY
2013-14 stood at Rs 3,100 crore, the
post-merger banking entity is
estimated to have assets worth
nearly Rs 2 lakh crore and at a
workforce of about 40,000
employees.
5. The merger is set to enhance the
lending portfolio of Kotak Mahindra
from primarily urban retail to Small &
Medium Enterprise (SME) sector,
which has been the forte of ING
Vysya so far. The expansion of its
banking operations to southern
states of India and strengthening of
assets would attract a greater
number of institutional as well as
online stock trading

6. individual borrowers with a rich and
diverse profile.
6. The industry and experts hope
this merger to bring a wave of
change in the Indian banking industry
with possibility of more such
acquisitions being announced by top
banking brands in the country in near
future. This would in turn take the
market competition to a higher level
and drive the economy ahead in
general.
It is to be noted that this acquisition is
subject to the approval of respective
shareholders of both the banks along
with Reserve bank of India and
Competition Commission of India apart
from other regulatory bodies before the
deal can be completed by April 2015.
One must keep in mind that while the
announcement of the deal has raised

7. high hopes of improvement in banking
sector and other positives but it does not
come without a number of risks, some of
them being the fact that in past such
banking mergers have been fraught with
serious issues due to strong employee
unions, restrictive regulations and a host
of other factors. However, one thing is
for sure that all eyes would be on the
successful completion of this
momentous deal and if everything goes
right, everyone might have a reason to
cheer.
- See more at:
https://www.ashlaronline.com/Kota-ING-
Vysya-Merger-Set-To-Create-Fourth-
Largest-Private-Bank-in-
India#sthash.JJgZl2xW.dpuf