Axis clears Enam deal

The board of Axis Bank today approved the merger of the financial services business of Enam Securities Pvt Ltd (Enam) with itself but with some changes to the original proposal. The deal announced in November had envisaged an all-stock transaction worth Rs 2,067 crore. Enam shareholders were to receive 5.7 shares of Axis Bank for every 1 equity share of Enam. Though the share-swap ratio remains the same, the deal now involves a cash payout to the bank. In the first step, Enam’s financial services business will be merged with Axis Bank under a scheme of arrangement whereby Enam shareholders will be issued over 1.37 crore shares on the basis of the agreed swap ratio. After the merger, the bank will sell the Enam business to its wholly owned subsidiary, Axis Securities and Sales Ltd (ASSL). ASSL shall then pay the bank a cash consideration of around Rs 274 crore, which represents the book value of the Enam unit. The bank said the proposed scheme of arrangement was formulated in compliance with the conditions prescribed by the RBI and approved by its board. Though the deal was announced last year, its approval got delayed as the central bank wanted a few changes in the deal. When the deal was announced, Axis Bank had said it would induct Vallabh Bhansali, the co-founder and chairman of Enam, as an independent director on its board, subject to approval from its shareholders and the RBI. However, the RBI stipulated that no shareholder of Enam having shares of the bank because of the deal would be eligible for being a director on the board.