c c c






 

Transaction valued at more than Rs3,000 crore and per-branch acquisition cost at Rs7
crore, analysts say

Mumbai: Shareholders of the troubled Bank of Rajasthan Ltd (BoR) are set to get 25 shares of ICICI
Bank Ltd for 118 shares of BoR in the ratio of 4.72:1, after the boards of the two banks decided to go
ahead with a merger.

³This is based on an internal analysis of the strategic value of the proposed

amalgamation, average market capitalization per branch of old private
sector banks and relevant precedent transactions,´ an ICICI Bank release
said, after its board gave its in-principle approval to the proposal.

BoR promoter Pravin Kumar Tayal termed the proposed merger as a ³win-
win´ situation for all²the banks, their employees and investors.

In a day of high drama, BoR stock rose 19.95% on the Bombay Stock
Exchange to close at Rs99.50, its year high, and after trading hours, the
bank sent a release to the stock exchanges saying its board will meet in the
evening to discuss a proposal of merging the bank with ICICI Bank.

Boads of both banks met in the evening separately, and after the meeting
ICICI Bank sent a release, saying, it ³has entered into an agreement with
certain shareholders of Bank of Rajasthan agreeing to effect the
amalgamation of Bank of Rajasthan´ with itself.

ICICI Bank stock was down 1.45% to Rs889.35.

Audit firm Haribhakti and Co. and Deloitte Haskins and Sells will assess the
valuation of Bank of Rajasthan and the boards of both banks will meet on 23
May to seal the deal.

³The final determination of the share exchange ratio is subject to due

diligence, independent valuation,´ ICICI Bank said.

Ö
A History of Mergers (Graphic)

Most banking analysts said the currently proposed swap ratio is highly
favourable to Bank of Rajasthan shareholders.
A back-of-the-envelope calculation by analysts values the deal at more than
Rs3,000 crore and per branch acquisition cost at Rs7 crore for ICICI Bank,
almost equivalent to ICICI¶s per branch opening cost.

ICICI Bank, India¶s second largest lender, is among banks that held talks to
buy a controlling stake in Bank of Rajasthan, The Economic Times reported
on 6 May.

This will be ICICI Bank¶s third acquisition after Bank of Madura in 2000-01
and Sangli Bank in 2006-07. The first acquisition helped ICICI Bank step up
its presence in the south and the second in the west. The BoR acquisition will
strengthen its network in northern as well as western India.

BoR has a network of 463 branches and 111 ATMs. About 60% of its
branches are in Rajasthan. ICICI Bank, India¶s largest private sector lender,
has a network of 2,009 branches and 5,219 ATMs.

ICICI Bank has an asset base of Rs3.63 trillion and posted a net profit of
Rs4,025 crore in 2010. BoR¶s asset base is Rs17,224 crore and in first nine
months of fiscal 2010, its net loss was Rs9.82 crore. It posted a net loss of
Rs44.70 crore for the December quarter and has not announced March
quarter earnings.

BoR¶s net non-performing assets as a percentage of total loans in December

was 1.05%. The comparable figure for ICICI Bank for the year-end is
1.55%.

³The proposed amalgamation would substantially enhance ICICI Bank¶s

branch network, already the largest among Indian private sector banks, and
especially strengthen its presence in northern and western India. It would
combine Bank of Rajasthan¶s branch franchise with ICICI Bank¶s strong
capital base,´ the ICICI Bank release said.

India¶s capital markets regulator in March banned BoR promoter Tayal and
about 100 companies and people associated with his family from trading in
securities for improper disclosure about their holdings in the bank.

According to the Securities and Exchange Board of India, the Tayal family
owned 55.01% of the bank in December, even though Tayal claimed his
group stake was 28.06%.

BoR has also been under the scanner of the Reserve Bank of India (RBI) for
alleged violation of banking regulations, including those on corporate
governance.
G. Padmanabhan, BoR managing director and chief executive officer, was
appointed by RBI in November for two years with a mandate to improve
corporate governance practices at the bank.

RBI has also ordered two major audits of the bank.

‰
hic by Yogseh Kum
/ Mint

Anu Roy cont ibuted to this sto y.

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May, 20th 2010

ICICI Bank sets swap ratio at 25:118.

Bank of Rajasthan is to be merged with ICICI Bank. The boards of both banks, which met separately
on Tuesday evening, granted in-principle approval for the merger.

In a statement, ICICI Bank said it has entered into an agreement with certain shareholders' of the
BoR for amalgamation of the bank with itself with a share swap ratio of 25:118 (25 shares of ICICI
for 118 shares of BoR).

Swap Ratio

The bank said the swap ratio is based on an internal analysis of the strategic value of the
amalgamation, average market capitalisation per branch of old private sector banks and relevant
precedent transactions. The board of BoR is scheduled to meet on May 23.

According to analysts, the swap ratio works out to a premium of 89.4 per cent over BoR's current
market price. The merger is not likely to have any material impact on ICICI Bank's capital and the
only advantage is a readymade branch network. With a Tier-I capital of above 13 per cent, the
impact on ICICI Bank's capital would be less than 3 per cent.

Post-merger, ICICI Bank's branch network would go up to 2,463.This is the third merger for the
bank, after it took over Bank of Madura and Sangli Bank.

Tayal Group's Stake

ICICI has negotiated the deal with the dominant shareholder group the Tayal family which holds a
declared stake of 28.6 per cent. However, according to the SEBI ex-parte interim order on March 8,
2010, the Tayal group and related entities hold 55.01 per cent stake.
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Posted by Saurabh Pal on May 19, 2010 in General News, World News | 0 Comment
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Mumbai, Tayal Family decided to merge up Bank of Rajasthan with ICICI bank after facing tough time by the
regulators.

Tayal family are the controllers of the Bank of Rajasthan. They declared on Tuesday about this merger with ICICI
Bank.

Board of directors will meet again on 23rd May. ICICI bank says they network will go stronger with this deal. Board
will follow up with the directors on the valuation report and diligence report on 23rd meeting and if everything goes
fine, means the proposal if got passed by ICICI bank then BOR will place this proposal among the share holders and
the of both banks for approval and then later on submitted to RBI (Reserve Bank of India) for consideration

Bank of Rajasthan is a listed bank with its corporate office in Mumbai and registered office at Udaipur inRajasthan. As
on March 31, 2009, Bank of Rajasthan had 463 branches and 111 ATMs, total assets of Rs.17,224 crore, deposits of
Rs.15,187 crore and advances of Rs.7,781 crore. It made a net profit of Rs.118 crore in the year ended March 31,
2009, and a net loss of Rs.10 crore in the nine months ended December 31, 2009.

ICICI Bank further stated that it has entered into an agreement with certain shareholders of Bank
of Rajasthanagreeing to effect the amalgamation of Bank of Rajasthan with ICICI Bank with a share exchange ratio of
25 shares of ICICI Bank for 118 shares of Bank of Rajasthan
 Seeking it third acquisition in the last decade, ICICI Bank is all set get Bank of Rajasthan in its
kitty. Boards of both the banks have agreed in principal over the merger. ICICI Bank has already
begun a due diligence exercise on BoR on Tuesday.
Bank of Rajasthan is controlled by Tayal family. But the family has been haunted by the regulators.
This has forced them to seek the merge the bank with the ICICI Bank, country¶s second largest leader
in the sector.

Bank of Rajasthan MD & CEO G Padmanabham told that the decision of amalgamation of the bank
with the ICICI was taken in a brief board meeting. He said that the approval was given in principal
and majority of the shareholders are thinking of swapping their shares with ICICI Bank shares,

Under the merger plans, a BoR shareholder will get 25 ICICI Bank shares for every 118 BoR shares
held. ICICI Bank MD & CEO Chanda Kochar, however, says that the swapping of the shares depends
on the due diligence.

After acquiring BoR a decade ago, the Tayal family was recently under the scanner of the regulator
Sebi, which questioned the shareholding of the bank. The regulator had banned 100 entities which
were holding BoR shares on behalf of the promoters.