After four months of discussions, IDFC Bank and Shriram Capital have called off their merger talks. According to media reports, the two parties could not reach to a consensus valuation of the merged entity. Another reason, which is being given for the call-off is the regulator being unsatisfied with the conditions proposed by both these entities. These two companies had officially started talks to merge their businesses in July first week.
Sources directly aware of the development also stated that the management of both these companies was eying for creating at least 4 different entities. However, the stakeholders did have a different view and demand over the same. The same resulted in the talks stretching more than expected and finally, the companies collectively called off the talks. The development has not been announced publicly yet, however, according to sources, an official statement will be issued by end of today.
With the proposed deal, IDFC Bank was trying to get on the mainstream scene of banking with modern technology, whereas, Shriram Capital was eyeing to conduct its operations under a proper banking licence. According to the announcement made on July 8th, the two companies were to combine their businesses and work under IDFC Ltd. The companies had also decided a time frame of three months to draw a conclusion and conclude the merger talks.
At the end of September, when the three-month period got over, both the companies had decided to extend the timeframe for a month. However, now that the talks are officially called off, we’ll have to see as to what strategies do these companies implement in the time to come.
Shriram Group runs Shriram Capital, Shriram City Union Finance and a transport finance business.