HDFC merger: The biggest news in the finance scene

As HDFC Bank agreed to buy the nation's largest mortgage lender in a $40 billion deal on Monday, the move has been widely speculated to be the largest transaction in Indian corporate history.

“The biggest motivation for the deal is creating demand in the housing market as our penetration in this segment is very low,” Sashidhar Jagdishan, chief executive officer of HDFC Bank said at a press conference. “We are losing our customers to other banks.”

Housing Development Finance Corp., which offers loans to more than half of the nation's home buyers, is up for acquisition by HDFC Bank Ltd. for 100% of its stock.

Following the announcement, shares of the two Mumbai-based companies surged. HDFC soared as much as 20% before paring gains, while HDFC Bank closed 10% higher.

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