The equity shares held by BoB and its nominees in Bareilly Corporation will, however, stand cancelled. The ratio has been arrived at by adopting a combination of three methodologies with appropriate weightages, which include the price-earning capacity value, net-asset value and the BoB scrip's market price. The valuation exercise was carried out by SBI Capital Markets.

BoB has said that holders of less than 11 equity shares in the bank will not be entitled to the issue or allotment of any shares, but shall receive the sales proceeds in respect of their fractional entitlement.

The merger has been carried out since there is substantial overlap between the businesses of BoB and Bareilly Corporation. "Considering the business profile of the northern region in general, and the performanceof other smaller banks in the region, and taking into account the fact that Bareilly Corporation is not capitalised adequately as on March 31, 1998, as also the fact that the future profitability and long-term viability of Bareilly Corporation would be doubtful, even if a one-off infusion of funds was made therein, it was considered that it would be conducive to the interest of Bareilly Corporation and BoB if their common business interests were integrated, as considerable synergy would be obtained by integrating their respective strengths," BoB has said in the extraordinary general meeting (EGM) notice to its shareholders.

Bareilly Corporation Bank will be merged with Bank of Baroda under the provision of section 44(A) of the Banking Regulation Act, 1949. BoB will hold an EGM immediately after the annual general meeting slated to take place on July 30, seeking approval for the merger proposal.

The merger will, however, involve transfer and issuance of shares or payment of cash up to 2 per cent of theshares of Bareilly Corporation Bank, since BoB is holding 98 per cent of the equity of Rs 5.16 crore of the bank, while the remaining 2 per cent is held by the public.