The board of Aditya Birla Nuvo on Thursday approved a two-way merger deal with Grasim Industries. First, Aditya Birla Nuvo will merge with Grasim and later the financial services business of the combined entity will be hived off and folded into Aditya Birla Financial Services.
Aditya Birla Financial Services will be then listed on stock exchanges. This scheme of arrangement was approved by the boards of the three Aditya Birla Group companies.
For merger of Aditya Birla Nuvo with Grasim, each shareholder of Aditya Birla Nuvo will get 3 new equity shares of Grasim for every 10 equity shares held in Aditya Birla Nuvo. This means that a shareholder holding 100 shares in Aditya Birla Nuvo will receive 30 shares in Grasim.
Aditya Birla Nuvo is a $3.6 billion conglomerate with presence in financial services, telecom, linen and agri-businesses among others. Its telecom venture, Idea Cellular, is the third largest mobile operator in the country.
Grasim is a $5.6 billion entity comprising businesses in cement, chemicals and viscose staple fibre. Its subsidiary UltraTech is the biggest manufacturer of cement in India.
For demerger of financial services business into Aditya Birla Financial Services, each shareholder of Grasim (post-merger) will receive 7 equity shares in Aditya Birla Financial Services for every 1 equity share held in Grasim. This means shareholder holding 100 shares in Grasim will receive 700 shares in Aditya Birla Financial Services.
In aggregate, each shareholder of Aditya Birla Nuvo holding 100 shares will receive 30 shares in Grasim and 210 shares in Aditya Birla Financial Services.
Kumar Mangalam Birla, chairman of Aditya Birla Group said, "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."
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