Trying a bit of number crunching, can someone please guide me if and where I am wrong as I seem to reach a conclusion that bank is actually at a slight gain with this arrangement.
IDFC Limited 100 shares = IDFC First Limited 155 Shares
Market Cap | IDFCFIRSTB = 54,311 Crores | IDFC Limited = 17,455.83
Premerger Outstanding shares | IDFCFIRSTB = 661.8122 Cr | IDFC Limited = 159.9984 Cr
If for 100 Shares of IDFC = 155 Shares of IDFCFIRSTB issued
so 1599984436 (total outstanding shares of IDFC Ltd) = 1599984436 * 155 / 100 = 2479975876 Shares of IDFCFIRSTB will be issued to get entire IDFC Limited
Post issue outstanding shares of IDFCFIRSTB = 2479975876 + 6618121816 (current outstanding shares) = 9098097692
Considering bank’s market cap of 54311 Crores, value of 2479975876 newly issued shares post merger = 2479975876 / 9098097692*54,311 = ~14804 Crores
So for 14804 Crores, bank is getting 2646438348 shares of IDFCFIRSTB held in IDFC, that post merger will be valued at 2646438348 / 9098097692 * 54,311 = ~15798 Crores.
So essentially bank is paying 6.3% ((14804/15798-1)*100) less than current post merger market value of its own shares held in IDFC even if we don’t consider other value (cash, etc.) held in IDFC.
So essentially bank is in slight gain. No?
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