ICICI to acquire Bank of Rajasthan; share swap ratio 25:118

Mumbai, May 18 (PTI) India's top private sector lender
ICICI Bank Tueday agreed to take over Bank of Rajasthan in a
share swap deal that values the Udaipur-based bank at over Rs
3,000 crore -- more than double its current market valuation.
ICICI Bank will offer 25 shares for every 118 shares of
BoR held by the Tayal family, which according to market
regulator Securities and Exchange Board of India holds 55 per
cent equity in BoR.
Under the share swap ratio, Tayal group for their 8.88
crore BoR shares will receive 1.88 crore ICICI Bank shares
currently worth Rs 1,672 crore. But Tayals' claim to hold only
28.6 per cent.
Tayal family, which will get a little over one per cent
stake in ICICI Bank after the deal, had recently run into
regulatory trouble with SEBI and RBI over stakeholding, which
had risen contrary to the impression it conveyed.
The deal values Bank of Rajasthan at Rs 3,040 crore,
double the current market cap of nearly Rs 1,500 crore.
ICICI Bank's shares fell 1.45 per cent to Rs 889, while
BoR scrip surged 20 per cent to Rs 99.50 on BSE.
ICICI Bank said in a statement that the swap ratio was
based on internal analysis of strategic value of the proposed
deal and the final share exchange ratio is subject to "due
diligence, independent valuation and (regulatory and
shareholder) approvals."
The two banks have jointly appointed accounting firm
Haribhakti & Co to arrive at the valuation. The Boards of both
the banks met separately today and approved in-principle to
merge and decided to meet again on May 23.
"The board has given in principle approval for the
merger", said G Padmanabhan, Managing Director and CEO of Bank
of Rajasthan after the board meeting.
Tayal group's P K Tayal said the deal does not involve
stake sale and would be executed through exchange of shares.
It was not clear if other shareholders are eligible only
for a share exchange offer or also a cash offer.
The share exchange ratio is based on market
capitalisation per branch of old private sector banks and the
relevant precedent transactions, ICICI Bank said.
BoR has a total business of over Rs 23,000 crore, as
against nearly Rs 384,000 crore of ICICI Bank. BoR's turnover
was Rs 1,507 crore in 2008-09, while that of ICICI Bank in
2009-10 was over Rs 33,000 crore.
BoR has a network of 463 branches, while ICICI Bank has a
little over 2,000.
ICICI Bank's last acquisition Maharashtra-based Sanghli
Bank in 2007. And the last major acquisition in the country's
private sector banking space was in 2008, when HDFC Bank
acquired Centurion Bank of Punjab. MORE PTI DU
KAB


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