HCL to issue preferential shares to Deutsche Bank

26th November 2004: HCL Technologies Ltd has informed The Stock Exchange, Mumbai that its board of directors on Wednesday has approved a preferential issue of 19,358,989 equity shares of Rs 2 each fully paid up at a price of Rs 361 per share to Deutsche Bank AG (DB), aggregating around Rs 700 crore. In a notification to The Stock Exchange, Mumbai, the company said that their boards of directors have already approved the allotment, which is subject to the necessary regulatory and other approvals. The company will also be holding an extra-ordinary general meeting (EOGM) of its shareholders on December 21, 2004 to seek their approval.

The payment pertains to the acquisition of the balance 49% in the Singapore-based DSI Financial Solutions, currently held by Deutsche Bank. With the transaction, DSI and its subsidiary DSL Software will become wholly owned subsidiaries of HCL.

BOI, Union Bank merger plan enters the vital stage

25th November 2004: The proposed merger of Bank of India and Union Bank of India, the first of its kind between two listed, nationalised banks — now looks about to happen. The Reserve Bank of India (RBI) top brass will meet this week to give its recommendations on the plan and post-merger requirements. RBI, which bankers think may be favorably inclined towards the merger, subject to certain conditions, is expected to give its views next week. The ministry of finance recently sought the regulator’s views on the proposal for merging two strong banks with a significant presence in the country’s richest loan market. After receiving the RBI’s recommendations, the government will take up the matter with the boards of the two banks.

Union Bank of India board will meet on November 30, but there is no confirmation on whether the merger issue will be discussed. BoI officials said no board meeting has been scheduled. The proposed merger will create the second-largest bank in India, smaller than State Bank of India but bigger than ICICI Bank. Bank of India is the bigger bank in terms of assets, network and profits.

Bank of India had assets of Rs 83,069 crore and net profit of Rs 1,008 crore on March 2004. Union Bank of India’s assets as of end-March 2004 amounted to Rs 58,317 crore and net profit stood at Rs 712 crore. In terms of market capitalisation, however, it is the other way round, with a market capitalisation of Rs 3,438 crore for Bank of India and Rs 4,279 crore for Union Bank. Bank of India was last traded at Rs 70.5 on the BSE, while Union Bank was dealt at Rs 92. It is not clear at this stage, which brand identity will be retained. Although Union Bank of India is more valuable; BoI is a better-known name. In addition, BoI has a significant global presence, while Union Bank does not have any overseas branches. Present laws do not have any provision for merger of two healthy nationalised banks.

Siemens to merge its arm with itself

23rd November 2004: Engineering major Siemens is planning to merge the Bangalore based group firm Siemens VDO with itself. The company’s board of directors is meeting on November 25 to consider the proposal for the merger of Siemens VDO with the company. Yesterday, Siemens shares fell 0.7% to Rs 1,265.