Kotak Mahindra Bank shares surge 9% on ING Vysya deal

Kotak Mahindra Bank shares surged as much as 9.3 per cent to Rs 1,264.70, its second consecutive record high.

Shares of Kotak Mahindra Bank today surged nearly 9 per cent after the private sector lender announced the acquisition of ING Vysya Bank in an all-stock deal valued at Rs 15,000 crore.

Kotak Mahindra Bank’s stock jumped 8.97 per cent to Rs 1,260.90 — its 52-week high level on the BSE. Shares of ING Vysya Bank too rose by 4.27 per cent to Rs 849.

The deal was announced in post market hours yesterday. Also in the previous session, both these stocks had gained over 7 per cent.

“For the shareholders of both Kotak Mahindra and ING Vysya, this deal may prove to be win-win in the medium to long term scenario. This deal may be particularly useful for ING Vysya bank as this will offer them to be part of much larger bank,” said Jagannadham Thunuguntla, Head of Research, SMC Global Securities Limited.

“This deal will bring the combined bank much larger size. Especially when the economy is on the verge of take-off, this will have the combined bank enough bandwidth to take advantage of the future opportunities of the economy,” he added.

In India’s biggest banking merger, private sector lender Kotak Mahindra Bank yesterday announced the buyout of ING Vysya Bank in an all-stock deal valued at Rs 15,000 crore, which is likely to set off consolidation moves ahead of the entry of new players.

The all-stock deal values ING Vysysa stock at Rs 790 a share, which is a 16 per cent premium to the 30-day stock price as of November 19, while pegging Kotak Bank at Rs 1,119 a share in similar manner.

Accordingly, ING shareholders will get 725 Kotak Bank shares for 1000 shares of the Bangalore based lender. This values ING Vysya Bank at Rs 15,033 crore.
Post-deal, ING NV will hold 6.5 per cent in the combined entity, while Kotak promoters stake will be diluted to 34 per cent from 40.12 per cent.

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