ABNL to merge with Grasim Industries Ltd

Q.  ABNL will merge with which company to unlock shareholder value and create a USD 9 billion enterprise?
- Published on 16 Aug 16

a. Grasim
b. Birla Infosoft
c. Jaypee
d. Jaycee

ANSWER: Grasim
 
Aditya Birla Nuvo Ltd will merge with Grasim Industries Ltd to unlock shareholder value and create a USD 9 billion or INR 59,766 crore enterprise.
  • With this merger, Aditya Birla Group will hive off financial services business into a separate entity to be listed later.
  • BoD of Grasim Industries Ltd, ABNL and Aditya Birla Financial Services Ltd at their respective meetings approved the merger of ABNL into Grasim and subsequent demerger and listing of financial services business through a composite arrangement scheme.
  • Transaction which is subject to regulatory approvals will be implemented in 2 phases.
  • ABNL will first merge into Grasim and financial services business would then be demerged resulting in listed financial services company with 57 percent owned by post merger Grasim and the balance being held by post merger Grasim shareholders on a proportionate basis.
  • Following the merger, Grasim with an aggregate turnover of INR 59,766 crore and EBITDA of INR 11,961 crore for March 31, 2016 will become India‚Äôs top cement company and will be among the top diversified private NBFCs in India.
  • It will be the third ranked telecom operator besides being among the top four private sector insurance and asset management companies.
  • The proposed transaction will create a combined entity with USD 9 billion revenue, EBITDA of INR 12,000 crore and EBIDTA margins of 19 percent.
  • This is a win-win situation for shareholders of both companies - Grasim shareholders will gain access to high growth businesses of financial services and telecommunications while Nuvo shareholders will get strong cash flow business of cement and VSF
  • ABFSL will be listed by May-June 2017.
  • For each merger of ABNL with Grasim, each ABNL shareholder will get three new equity shares of Grasim for every 10 equity shares held in ABNL which means shareholder holding 100 shares in ABNL will receive 30 shares in Grasim.

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