ICICI:ICICI Bank swap ratio is 2:1 - Views on News from Equitymaster

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ICICI:ICICI Bank swap ratio is 2:1

Oct 25, 2001

ICICI has decided to merger with ICICI Bank Ltd., its banking arm, along with its two subsidiaries, ICICI Personal Financial Services and ICICI Capital Services. The institution has announced the merger ratio of 2 ICICI shares for every 1 share of ICICI Bank. The swap ratio is in the favour of shareholders of ICICI Bank. After the merger it will become the second largest financial entity in India (after SBI).

ICICI Personal Financial Services is engaged in the distribution of retail credit products and other services offered by ICICI and ICICI Bank. ICICI Capital Services on the other hand, is the largest distributor of financial and investment products in India. The company also provides front-office services to the retail and semi-retail investors of ICICI, and undertakes the management of the various ICICI centers that are set up.

At the current market price of Rs 105, ICICI Bank is trading at a P/E of 10x FY02 projected earnings and a Price/Book value of ratio of 1.6x. ICICI on the other hand, is trading at a P/E of 4x FY02 projected earnings and a Price/Book value ratio of 0.5x.

We will update the details of the merger and impact of the same after both the companies declare their September quarter results.

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