Murugappa Group to buy DBS Bank stake in JV for Rs376 crore
30 March 2010
The Chennai-based Murugappa Group will acquire DBS Bank's 37.48 per cent stake in its joint venture Cholamandalam DBS Finance Ltd (CDFL) for about Rs376 crore.
The deal, at Rs91 per share, represents a 1.2 per cent premium to Monday's closing price of the company's shares on the Bombay Stock Exchange.
The Murugappa Group will also buy out the fully convertible preference shares (worth around Rs150 crore) of DBS Bank in the joint venture.
DBS Bank said in a statement that it is planning to pursue growth in India by focusing on corporates, high net worth individuals (HNIs) and emerging affluent customers.
"Focus on the mass consumer segment is not part of (our) strategy in India. Our lines of focus are on corporates, SMEs and affluent segment. It makes sense in making this divestment (in line with the strategy)," DBS group chief executive Piyush Gupta told reporters in Mumbai.
The stake buy-out is being done by the Murugappa Group companies Tube Investments of India Ltd and New Ambadi Estates Private Ltd.
After the completion of the formalities, DBS Bank's members in the company's board will be replaced by the subsidiaries' representatives.