Shares of Aditya Birla Nuvo Ltd. and Grasim Industries Ltd. gained close to 4 percent on a day when the Nifty dropped most in a month, ahead of a restructuring exercise that would tighten billionaire Kumar Mangalam Birla's grip of a business empire with more than $40 billion in annual revenue.
Here's an all you need to know
In August of last year, the board of directors of Aditya Birla Nuvo Ltd. approved the scheme of merger with Grasim Industries. Post the merger, the scheme provides for demerger of financial services from amalgamated Grasim Industries Ltd. into Aditya Birla Financial Services Ltd (ABFSL).
Upon demerger of ABFSL, the shares will be separately listed on the bourses. In the chronology of events, Aditya Birla Nuvo, at first will be merged with Grasim. Subsequently, ABFSL will be demerged from Grasim.
The scheme has received approvals from the Competition Commission of India (CCI), shareholders and creditors of both Grasim and AB Nuvo. Also, the National Company Law Tribunal (NCLT) approval has been in place from the bench at Ahmedabad.
The record date has been fixed as July 6, 2017 for the merger of AB Nuvo and Grasim. Before the record date the futures contract of AB Nuvo will expire on July 4, 2017.
The Math
The swap ratio for the merger is set at 15 shares of Grasim for every 10 shares held in Aditya Birla Nuvo. The swap ratio for demerger of financial services is set at 7 shares of ABFSL for every 5 shares held in Grasim. This implies a swap ratio for demerger of financial services at 210 shares of ABFSL for every 100 shares held in Aditya Birla Nuvo.
Who Does What?
Grasim
Post the demerger Grasim will comprise of viscose staple fibre (VSF) manufacturing and will remain the holding company for group companies which include Idea Cellular, UltraTech Cement, AB Fashions and AB Financial Services.
ABFSL
The company will run the entire Birla group's financial services ranging from health insurance, non-banking financial company (NBFC), housing finance to asset management.
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