Financial Daily from THE HINDU group of publications
Tuesday, Nov 08, 2005
Financial Daily from THE HINDU group of publications Tuesday, Nov 08, 2005 |
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Money & Banking
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Mergers & Acquisitions Differences over valuation — Federal Bank, Lord Krishna call off merger plan Our Bureau
Kochi , Nov. 7 THE managements of Federal Bank and Lord Krishna Bank have decided to call off the merger of the two banks as they could not agree on the issue of valuation. Mr M. Venugopalan, Chairman of Federal Bank, said that there was considerable disparity on the valuations of the two banks, that could not be bridged . Mr Venugopalan led the talks from the Federal Bank side, while Mr Mohan Puri, Director of Lord Krishna Bank, led the talks from the other side. Federal Bank today informed the BSE that while the process of due diligence for the purpose had gone amicably with full co-operation between the banks; despite best efforts, the two sides could not reach a mutually agreeable valuation for the purpose. The merger proposal has been called off due to the differences over valuation among other things, Mr V.K. Gupta, Deputy Managing Director of Lord Krishna Bank, said. Stating that there will be no further talks with Federal Bank over the merger proposal, Mr Gupta pointed out that Lord Krishna Bank is a strong bank, based on sound financials and the bank will continue to function as before. There had been strong opposition to the merger from the officers and employees of Federal Bank, citing that the valuation of Lord Krishna Bank was very high and they did not want to give a berth on the board of the merged entity to a nominee from Lord Krishna Bank. Nomination to the board was not discussed at all. In fact, the talks fell through much before it could get around to a discussion on additions to the board of directors, senior banking sources said. Though Lord Krishna Bank would have been entitled to its nominee on the board, the nomination could have been approved only after obtaining the requisite clearance and sanction of the RBI, the sources added. Mr Venugopalan had been a keen proponent of the merger since he envisaged future growth of Federal Bank through mergers.. The Federal Bank scrip closed at Rs 164.45 on the BSE, up from its previous close of Rs 162.05. Lord Krishna Bank is a privately held bank and is not listed on the bourses.
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