The GTB - UTI Bank Merger
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Case Details:
Case Code : FINC004
Case Length : 7 Pages
Period : 2001
Pub. Date : 2002
Teaching Note : Available
Organization : GTB
Industry : Banking
Countries : India
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FINC004) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note
On January 24, 2001, when the merger was announced, the GTB stock hit the two upper circuit limits of 8% each on the BSE, and was locked at Rs 93.95.
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The trading volume pattern of GTB and UTI Bank stocks also showed a marked rise on the BSE.
Did someone trading on the BSE know more than the others in the market? The price movement of the GTB, UTI Bank stocks had shown an interesting pattern since the beginning of 2001, with considerable increase in volumes at their counters.
GTB and UTI Bank were attracting meagre volumes till the first week of January.
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Trading volumes picked up, with average daily volumes on the GTB counter at BSE increasing from 20,000 shares to 1,57,000 shares on January 24.
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At NSE the trading volumes jumped fourfold, from 15,000 shares to close to 67,000 shares. The price of the stock also increased from Rs 81 to Rs 94. It was the same story in the case of UTI Bank shares.
Trading volumes on the UTI counter at BSE rose from 34,000 shares to 2,58,000 shares on January 24 while at NSE the volumes shot up five times from an average of 45,000 to 2,70,00. The stock price marginally increased from Rs 45.75 to Rs 49.85.
GTB was alleged to have rigged its own shares before the merger for negotiating a better swap ratio of 2.25 shares of UTI Bank for each GTB share... |
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