Here's how D-Street reacted to news of IDFC-Shriram merger falling through

Kshitij Anand

Moneycontrol News

The proposed USD 12 billion mega-merger between IDFC Group and Shriram Group has been called off by the former as the two were unable to reach common ground on the swap ratio.

The confidentiality, exclusivity, and standstill (CEST) agreement entered into to evaluate a strategic combination of relevant financial services of the Shriram Group with the IDFC Group stands terminated with immediate effect, according to a release by IDFC.

The decision was taken at IDFC's board meeting on Monday to discuss second-quarter results as well as the merger.

Here’s how D-Street experts reacted:

Jimeet Modi, CEO, Samco Securities

The shareholders of Shriram group should heave a huge sigh of relief. The merger would have resulted in a holding company discount for Shriram Transport and merger of Shriram City Union in an underperforming IDFC Bank.

The shareholders need not worry about these discounts anymore and we believe that the Shriram Group stocks should do well going forward.

Saurabh S Jain, MD, SSJ Finance & Securities

With existing shareholders of both groups (IDFC and Shriram) having discomfort over valuations, the merger transaction was evidently a disaster in the making since the beginning.

Now, with the transaction having fallen through, IDFC is the apparent loser having lost out on a strong growth engine which it has been aggressively searching for its archaic banking business.

Santosh Meena, Senior Research Analyst, Swastika Investmart Ltd.

The market was sensing something, therefore, Shriram Group stocks were at day's high on Monday and IDFC stocks were at day’s low at the close of market because minority shareholders of the former were not happy with this deal.