CCI approves merger of Fincare Small Finance Bank with AU Small Finance Bank

Current Context: The Competition Commission of India (CCI) did indeed approve the proposed merger of Fincare Small Finance Bank (Fincare SFB) with AU Small Finance Bank (AU SFB) on January 23, 2024.

• This is a significant development in the Indian banking sector, and it's expected to have a number of implications for both banks and the industry as a whole.
• Here are some of the key details about the merger:
• Type of merger: All-stock merger, meaning Fincare SFB shareholders will receive shares of AU SFB in exchange for their holdings.
• Share exchange ratio: 579 AU SFB shares for every 2,000 Fincare SFB shares.
• Valuation: Fincare SFB is valued at around three times price to book based on Q2 FY24 financials, while AU SFB is valued at approximately four times price to book.
• Expected completion date: February 1, 2024, subject to necessary approvals.
• Next step: The merger is now awaiting final approval from the Reserve Bank of India (RBI).

Question:

Q.1 What type of merger is the proposed merger between Fincare SFB and AU SFB?
a. Cash merger
b. Mixed merger
c. All-stock merger
d. None of the above