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HDFC offers 29:1 share swap to CBoP investors

CNN-IBN
Feb 26, 2008 at 10:46pm IST

Mumbai: The board of HDFC Bank has approved issuance of one share for every 29 Centurion Bank of Punjab shares after the merger of the two financial institutions.

The board approved the share-swap ratio of one share of Rs 10 each of HDFC Bank for every 29 shares of Rs 1 each held in Centurion Bank of Punjab. HDFC Bank's board will meet on February 28 to consider the draft scheme for the amalgamation of the two banks.

"There are differnt valuation methods — the asset valuation method, income valuation, market price method. You take a combination of those and it comes to 29. According to valuers, if you take stock price you have to take the difference, whether you take Friday's price or avg of one week, its around 27," HDFC Bank Chairman Deepak Parekh said.

Shares of Centurion Bank of Punjab declined nearly 15 per cent on the Bombay Stock Exchange after the HDFC Bank announced the share swap ratio for the merger of the two financial institutions.

CBoP opened at Rs 50, down 11.34 per cent over its previous day close and fell further to witness an intra-day low of Rs 47.80 on the Bombay Stock Exchange. The scrip settled at Rs 48.25, down 14.45 per cent, on the BSE and more than 1.50 crore shares changed hands.

The shares of HDFC Bank also suffered a beating and closed at Rs 1,422.70, down 3.54 per cent on the BSE. Over 7.12 lakh shares got traded during the day. The decline in the share price movement of both the HDFC Bank and CBoP was despite the fact that the BSE Sensex, aided mainly by heavyweight Reliance Industries, bounced back by over 301 points.

The 30-share Bombay Stock Exchange barometer settled the day at 17,650.57, a smart rise of 301.50 points or 1.74 per cent, over its previous close.

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