What changes result from the IDFC Ltd. and IDFC First Bank merger?

A merger occurs when two companies combine into a single entity, with shareholders of the original company receiving shares of the new one. On September 27, 2024, IDFC Ltd. announced that it had received approval from the National Company Law Tribunal (NCLT) for its merger with IDFC First Bank Ltd. As part of this process, IDFC Ltd.'s shares will be suspended from trading on the stock exchanges starting October 10, 2024, and will no longer appear in Kite holdings.

Impact on shareholders

As part of the merger, IDFC Ltd.'s shares will be suspended from trading on stock exchanges starting October 10, 2024. After this date, the shares will no longer appear in Kite holdings but will still be visible in Console holdings until they are extinguished.

Under the terms of the agreement, IDFC Ltd. shareholders will receive 155 shares of IDFC First Bank for every 100 shares held. Any fractional shares will be cash-settled, with the proceeds credited to the shareholder’s primary bank account.

Shareholders who hold less than 100 shares of IDFC Ltd. will also receive IDFC First Bank shares in proportion to their holdings. For example, if a shareholder holds 10 shares of IDFC Ltd., they will receive 15.5 shares of IDFC First Bank. In this case, 15 shares will be credited to the demat account, and the fractional 0.5 shares will be cash-settled.

Timeline for receiving IDFC First Bank shares

Shareholders can expect to receive their IDFC First Bank shares within 30 to 45 days from the record date. A confirmation email will be sent by CDSL once the shares have been credited to their demat accounts.

Trading of newly allotted shares

Once the shares are credited, IDFC First Bank will require approval from the stock exchanges to list the new shares. Upon receiving this approval, the newly allotted shares will become available for trading. Shareholders can calculate the average price of their newly received IDFC First Bank shares using the following formula:

Average price = Total invested value in IDFC Ltd. / Total number of IDFC First Bank shares received (including fractional shares)

For example, if 100 shares of IDFC Ltd. were purchased at ₹100 per share, the total investment would be ₹10,000. Upon receiving 155 shares of IDFC First Bank, the average price per share would be ₹64.52 (10,000 / 155). Any fractional shares will be settled in cash, with the proceeds credited to the shareholder’s primary bank account.

All futures and options (F&O) contracts for IDFC Ltd., expiring in October, November, and December 2024, expired early on October 9, 2024, and are physically settled.