MAM
Kotak Mahindra Bank and ING Vysya Bank announce merger
MUMBAI: 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 held today have approved an all-stock amalgamation of ING Vysya with Kotak.
The amalgamation is subject to the approval of the shareholders of Kotak and ING Vysya respectively, Reserve Bank of India under the Banking Regulation Act, the Competition Commission of India and such other regulatory approvals as may be required.
Upon obtaining all approvals, when the merger becomes effective, ING Vysya will merge with Kotak. Shareholders of ING Vysya will receive shares of Kotak in exchange of shares in ING Vysya at the approved share exchange (“swap”) ratio. All shareholders of Kotak and ING Vysya will participate thereafter in the (merged) Kotak business. All ING Vysya branches and employees will become Kotak branches and employees. ING Vysya’s CEO designate, Mr Uday Sareen, will be inducted into the top management of Kotak reporting directly to Mr Uday Kotak, Executive Vice Chairman and Managing Director of Kotak.
Merger terms
The Boards of Kotak and ING Vysya respectively considered the results of a due diligence review covering areas such as advances, investments, deposits, properties & branches, liabilities, material contracts etc.
S.R.Batliboi & Co., LLP, Chartered Accountants, and Price Waterhouse & Co LLP, the independent valuers appointed by Kotak and ING Vysya respectively, have recommended a share exchange ratio, which has been accepted by the respective Boards. Avendus Capital Private Ltd. provided a Fairness Opinion to Kotak on the share exchange ratio and Edelweiss Financial Services Ltd. provided a Fairness Opinion to ING Vysya.
Accordingly ING Vysya shareholders will receive 725 shares in Kotak for 1,000 shares of ING Vysya. The share exchange ratio is considered fair and reasonable given the underlying value of ING Vysya, as also giving shareholders the ability to benefit from the potential that can be realised upon merging into Kotak.
This exchange ratio indicates an implied price of Rs.790 for each ING Vysya share based on the average closing price of Kotak shares during one month to November 19, 2014, which is a 16% premium to a like measure of ING Vysya market price.
The proposed merger would result in issuance of approximately 15.2% of the equity share capital of the merged Kotak.
One of ING Vysya’s directors will be joining the Board of Directors of Kotak.
Strategic Rationale and benefits
Kotak, with 641 branches and relatively deeper presence in the West and North, has a differentiated proposition for various customer segments including HNIs, deep corporate relationships including emerging corporates, a wide product portfolio, including agricultural finance and consumer loans, and a robust capital position.
ING Vysya has a strong customer franchise for over 8 decades, with a national branch network of 573 branches and deep presence in South India, particularly in Andhra Pradesh, Telengana and Karnataka. ING Vysya has a large customer base across all segments. It is particularly noted for a best-in-class SME Business, as also for serving large international corporates in India by access to the international relationships of ING Group.
The combined Kotak will have 1,214 branches, with a wide-spread pan-India network, getting both breadth and depth given the strong geographic complementarity between Kotak and ING Vysya.
Substantial efficiencies will arise out of the proposed merger, which is likely to result in significant benefits for all stakeholders, be it shareholders, employees or customers, and ultimately the banking industry:
· Customers and employees will benefit from the combined Kotak having a wider geographical spread, expertise across customer segments, such as SME, HNI, Corporates, and on products such as private banking, asset management, insurance, investment banking, NRI offerings etc.
· Kotak’s strong capital position potentially avoids capital raising and attendant dilution in the near to medium term for ING Vysya shareholders.
· Additionally, with ING Vysya nearing the cap for foreign shareholding, the merger would yield more liquidity with significant foreign headroom in Kotak even after merger, with foreign shareholding at ~47%.
Commenting on the announcement, Mr Uday Kotak, Executive Vice Chairman and Managing Director, Kotak Mahindra Bank, 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 of us.”
Commenting on the announcement, Mr. Shailendra Bhandari, presently MD & CEO of ING Vysya Bank Ltd, said — “Our two companies are a perfect match at a perfect time. Our customers will see tremendous value from the combined entity as we fill the gaps, in terms of a much larger footprint and a complete product suite, both national and international. Together, both companies will participate in the growth of one of India’s strongest and most successful banking franchises.”
ING Vysya’s CEO designate, Mr. Uday Sareen, said – “This is a historic day in our 84 year heritage. I truly believe that the merger is a game-changer for us, laying the foundation to help us leap-frog by several years and be part of, and further scale a truly national franchise. The combination creates a company that will deliver maximum value for our shareholders, enormous opportunities for employees and deliver the entire suite of financial products and services to our customers.”
Employees
Kotak has been rated among the best employers in the country and is renowned for its employee orientation and retention of talent. ING Vysya has a diverse set of employees, who have expertise in dealing with different customer segments. The combined entity will generate ample career opportunities for staff as well as a wider array of products to serve their customers, aided by management development opportunities across different businesses of Kotak Group.
Both organizations have strong cultures and employee best practices and the combined entity will work towards imbibing these and building a world-class organization.
ING Group
ING Group, which owns ~43% in ING Vysya, has indicated that it supports the proposed transaction. ING Group will become the largest non-promoter shareholder in combined Kotak.
ING Group and Kotak intend to explore areas of cooperation in cross border business, on the basis of a Framework for Future Cooperation that has been entered into, subject to mutual agreement on specific terms and all laws and regulations.
In addition to the experts who undertook valuation and issued fairness opinions, Ernst & Young LLP undertook due diligence review of ING Vysya for Kotak, and Amarchand & Mangaldas were legal advisors to Kotak. PricewaterhouseCoopers Private Limited carried out due diligence for ING Vysya and AZB & Partners were ING Vysya’s legal advisors.
MAM
Dish TV shareholders approve three independent directors
99.49 per cent vote of confidence strengthens board as company expands into connected TV, e-commerce and OTT.
MUMBAI: Dish TV has just been served a near-perfect vote of confidence and the shareholders have dished it out in style. Shareholders of the DTH operator have approved the appointment of three new Independent Directors with an overwhelming 99.49 per cent approval. The three appointees are Mr Arun Kumar Kapoor, Ms Heena Naishadh Bhatt and Mr Ashok Anant Paranjpe.
The strong mandate reflects continued investor faith in the company’s strategy, disciplined execution and long-term value creation. It comes as Dish TV focuses on stabilising its core DTH business while actively scaling new verticals connected TV platform VZY, B2B e-commerce ShopZop, and OTT service Watcho to build a more diversified and resilient growth trajectory.
Dish TV India Limited, CEO & executive director Manoj Dhobhal said, “We are encouraged by the shareholders’ approval of the appointment of the Independent Directors and sincerely thank them for their continued trust and confidence. The Board is already benefiting from the Directors’ collective experience, which will further sharpen strategic focus and support disciplined execution.”
With a fresh, strengthened board in place, Dish TV is well positioned to navigate the evolving media landscape. In a sector where every percentage point matters, a 99.49 per cent thumbs-up is the kind of ringing endorsement that suggests the company’s recipe for the future is already tasting right.
