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Grasim-Nuvo merger gets NCLT clearance

LiveMint logoLiveMint 05-06-2017 Deborshi Chaki

Mumbai: The merger of Grasim Industries Ltd and Aditya Birla Nuvo Ltd will be completed by the beginning of the next quarter, a top executive at the Aditya Birla group said. Separately, the National Company Law Tribunal (NCLT) has approved the restructuring which was announced in August.

“ We expect to complete the merger process of Grasim and Nuvo and the separate listing of Aditya Birla Financial Services by the end of the current quarter or latest by the beginning of next quarter” said Sushil Agarwal, group chief financial officer of Aditya Birla group, in an interview.

Earlier in April, shareholders of both Grasim Industries and Aditya Birla Nuvo approved the merger. The union is expected to create an entity with revenue of Rs54,824 crore and a net profit of Rs4,076 crore for fiscal year that ended on 31 March, said the Aditya Birla group.

“All of these businesses have capacity expansion plans to further strengthen their leadership position,” said Kumar Mangalam Birla, group chairman, in an emailed statement.

After the merger, Grasim will be the holding company for the group’s various businesses such as cement, chemicals and textiles. Nuvo was created as a vehicle for the group’s diversification into new areas such as apparel, telecom and financial services. Many of these businesses have since reached a stage where they have been spun off, even listed in some cases (such as Idea Cellular Ltd, the group’s telecom company that is now merging with Vodafone India).

“Having built a broad based portfolio and a leadership position in the sector, Aditya Birla Financial Services is well placed to grow rapidly, given the under-penetration of financial products and services in India” Birla said.

As part of the merger, Grasim will issue three shares for every 10 shares of Aditya Birla Nuvo held by investors. Post-merger, Grasim investors will get seven shares of Aditya Birla Financial Services for every one equity share they own. This will ensure that Grasim and Aditya Birla Nuvo investors own 25% of Aditya Birla Financial Services.

Post merger, the promoter holding in Grasim will rise to 38.8% from 31.3 % and it will have 57.2% in the newly-formed financial services company. Grasim will continue to hold 26 % in the merged entity of Idea Cellular and Vodafone India, which was announced in March.

“There is no decision yet on when Grasim will increase its stake in the merged entity of Idea and Vodafone” Agarwal said. As per the terms of the merger, Vodafone will be a dominant partner with 45.1% stake after it transfers 4.9% to the Aditya Birla Group for Rs3,874 crore. The Aditya Birla group will however have the right to acquire up to another 9.5% stake from Vodafone.

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