Merger of ABNL into Grasim and the Subsequent Demerger & Listing of the Financial Services Business
The Boards of Directors of Grasim Industries Limited (“Grasim”), Aditya Birla Nuvo Limited (“ABNL”) and Aditya Birla Financial Services Limited (“ABFSL”) at their respective meetings held today, approved the merger of ABNL into Grasim and the subsequent demerger & listing of its financial services business through a composite scheme of arrangement (“Scheme”).
Says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group, “The proposed restructuring will create one of India’s largest, well-diversified companies with a healthy mix of businesses with steady cash flows and long-term growth opportunities. With diverse businesses spanning manufacturing and services, the combined company provides a play on India’s growth story. The demerger and listing of the financial services business will unlock value for shareholders.”
The transaction, subject to regulatory approvals, entails implementation of the scheme through two steps:
With an aggregate turnover of approximately Rs. 59,766 crore and EBITDA of approximately Rs. 11,961crore for the year ended March 31, 2016, Grasim becomes:
Remarks Mr. Dilip Gaur, Managing Director of Grasim: “This merger provides the shareholders of Grasim with exposure to fast growing sectors including telecom and financial services.”
Mr. Lalit Naik, Managing Director of ABNL avers: “We believe this transaction provides significant benefits to our shareholders, through direct exposure to seasoned, strong cash flow generating businesses. Further, shareholders will benefit from a larger free float and better liquidity of the combined company.”
The Boards have approved the following exchange ratios based on the recommendations of the joint independent valuers (as mentioned below):
In aggregate, each shareholder of ABNL holding 100 shares will receive 30 shares in Grasim and 210 shares in ABFSL.
The Board of Grasim has also recommended sub division of its equity shares of Rs. 10 each into 5 equity shares of Rs. 2 each. The exchange ratio as stated above would be adjusted accordingly to take into account the effect of such sub division.
The transaction is subject to the customary statutory and regulatory approvals including approvals of the respective High Courts, the Stock Exchanges, CCI, the respective Shareholders and creditors of each of the companies. The demerger will become effective subsequent to the effectiveness of the merger. The transaction is expected to be completed by Q4 FY17 / Q1 FY18.
About Grasim:Grasim is a ~US$ 5.6 bn conglomerate comprising of businesses in cement, chemicals and viscose staple fibre. It is a leading global player in viscose staple fibre and is the largest manufacturer of chlor-alkali and epoxy resins in India. Its subsidiary UltraTech is the largest manufacturer of cement in India with a capacity of 69.3 MTPA and offers a complete range of building products.
For further information, please visit the company’s website at www.grasim.com
About ABNLAditya Birla Nuvo is a ~US 3.6 bn conglomerate with leadership position across its businesses. Its Financial Services business ranks among the top 5 fund managers in India. Its Telecom venture, Idea Cellular, ranks among the top 3 cellular operators in India. It is a leading player in Linen, Agri, Rayon and Insulators businesses. ABNL has recently ventured into the Solar Power businesses. It has also received an in-principle approval from RBI to set up a Payments Bank in joint venture with Idea Cellular. For further information, please visit the company’s website at www.adityabirlanuvo.com About Aditya Birla Group: A ~US$ 41 bn Indian multinational, Aditya Birla Group operates in 36 countries with ~120,000 employees. The Group major businesses include aluminium, copper, cement, viscose staple fibre (VSF), telecom, carbon black, financial services, fashion, retail, textiles and insulators, among others. Over 50% of the Group’s revenues flow from its overseas operations.
For further information, please visit the company’s website at www.adityabirlanuvo.com
About Aditya Birla Group:A ~US$ 41 bn Indian multinational, Aditya Birla Group operates in 36 countries with ~120,000 employees. The Group major businesses include aluminium, copper, cement, viscose staple fibre (VSF), telecom, carbon black, financial services, fashion, retail, textiles and insulators, among others. Over 50% of the Group’s revenues flow from its overseas operations.
Disclaimer: Certain statements in this “Press Release” may not be based on historical information or facts and may qualify to be “forward looking statements” within the meaning of applicable securities laws and regulations, including, but not limited to, those relating to general business plans & strategy of the company, its future outlook & growth prospects, future developments in its businesses, its competitive & regulatory environment and management’s current views & assumptions which may not remain constant due to risks and uncertainties. Actual results could differ materially from those expressed or implied. Grasim and/or ABNL assume no responsibility to publicly amend, modify or revise any statement, on the basis of any subsequent development, information or events, or otherwise. This “Press Release” does not constitute a prospectus, offering circular or offering memorandum or an offer to acquire any shares and should not be considered as a profit forecast or estimate for any period and no statement herein should be interpreted to mean that cash flow from operations, free cash flow, earnings, earnings per share for any of Grasim or ABNL, as appropriate, or be considered as a recommendation that any investor should subscribe for, or purchase any of the company’s shares.
Dr. Pragnya RamGroup Executive President, Corporate Communications & CSRAditya Birla Management Corporation Private LimitedAditya Birla Centre, 1st Floor, 'C' WingS.K. Ahire Marg, WorliMumbai 400 030.
91-22-6652 5000 /2499 5000
Fax: 91-22-6652 5741/ 42
A US $43 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is anchored by an extraordinary force of over 120,000 employees, belonging to 42 different nationalities.
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