IDFC, Shriram group enter merger talks. What do brokerages say?

Shriram group and IDFC unveiled their intent, on Saturday, to merge the two entities and have entered into an agreement to evaluate the proposal for 90-days. As per the proposed plan, IDFC Ltd will be the holding company of the merged entity. Shriram City Union Finance will be merged with IDFC Bank and Shriram Transport Finance will be a fully owned subsidiary of IDFC, which will also own 75% of the life and general insurance arms of Shriram Capital. Reacting to the development, shares of IDFC and IDFC Bank jumped around 8% and 4% to Rs 64 and Rs 68 levels, respectively in pre-opening trade. On the other hand, Shriram Transport Finance and Shriram City Union Finance rallied 9% and 2.5% respectively to Rs 1,100 and Rs 2,550 levels respectively. By comparison, the Nifty 50 traded flat at 9,665 levels, up 8 points, or 0.1%. Though the finer details of terms and conditions of the proposed merger haven’t been made public, here’s what leading research houses and brokerages think of the deal: Financial Astrology Tips

MACQUARIE

If I am a Shriram Transport Finance shareholder, I will land up getting shares in IDFC Ltd, which will have all other businesses – banking, life, general insurance etc which I don’t want. Plus the structure is inefficient as it would entail a holding company discount. Unless the shareholders of SHTF are compensated in terms of a huge premium, the deal should be opposed by them. As per IDFC management, they have already taken Sanlam – one of the large investors in Shriram Group on board with respect to this merger. Astrology and Numerology Trading Tips