|
INDIA
BUSINESS WORLD -
FEBRUARY 2006
THE MONTH THAT WAS IOB APPROVES 171CR BHARAT OVERSEAS BANK BUYOUT PLAN
The board of Indian Overseas Bank (IOB) approved the planned buyout of Bharat Overseas Bank (BhOB). IOB, which is the principal shareholder in BhOB with a 30% equity stake, plans to buyout the entire holding of six other commercial banks.
IOB will buy out the other banks at Rs 155 per share. The deal value stands at Rs 171 crore. The board of BhOB will meet on February 21 to consider the merger proposal. The finance ministry had cleared the merger earlier this month.
This is the first time that a public sector bank is acquiring a profit-making private bank without putting the latter on a moratorium. Thus, BhoB will first be converted into a subsidiary of IOB by buying out other shareholders, then the wholly-owned entity would be merged with the parent, i.e, IOB.
IOB chairman T S Narayansami said the bank is mulling to buy out BhOB in an all-cash deal or acquiring part of the shareholding through a share swap. Mr Narayansami said the exact modalities of the buyout will be announced in a week's time.
|
