Shriram group announces merger of 3 companies; shares of Shriram City Union jump nearly 11%

The shares in Shriram City Union Finance jumped almost 11 per cent to touch a day’s high level of Rs 2240 per share on the BSE intraday on Monday, as the Shriram Group announces a composite scheme of arrangement for the merger of Shriram City Union and Shriram Transport Finance. 

The respective board of the companies — Shriram Capital Limited, Shriram City Union Finance Limited and Shriram Transport Finance Company Limited announced the merger, which would be the largest retail finance NBFC in India, the Shriram City Union said in a filing to exchange on Monday. 

According to the statement, Shriram Capital will demerge its financial services and insurance business and the rest of its business to be merged with Shriram Transport. While Shriram Transport to merge Shrilekha business consultancy with Shriram Capital, it added. 

“Pursuant to the merger, Shriram Transport will issue: 1.55 shares for every 1 share of Shriram City Union 0.09783305 share for every 1 share of Shriram Capital; this translates into Shriram Capital shareholders getting 1 share of Shriram Transport for every 1 share held by Shriram Capital and Shriram Transport CL in STFC; Shriram Capital shareholders will get 1.55 Shriram Transport shares for every 1 share of Shriram City Union held by Shriram Capital,” the company said in a statement. 

The merged entity to be the market leader in all businesses it operates in - Commercial Vehicle Financier, MSME lender in customer segment and Two Wheeler financier, Shriram City Union said in a statement on Monday. 

It added this merger will help the entity in a comprehensive product suite, wider distribution network and increased customer touchpoints to prove beneficial to customers of both organizations. 

Similarly, the merged entity will also compel synergies to enhance shareholder value, besides will also give potential to increase new business margins through product mix optimisation and cross-sell leading to better operating leverage, the statement added. 

The shares of Shriram Transport are trading weak by over 1 per cent to Rs 1485 per share on the BSE, at around 02:58 pm.