The transaction, subject to regulatory approvals, entails implementation of the scheme through two steps: merger … NEW DELHI: Shares of Grasim Industries and Aditya Birla Nuvo advanced up to 2 per cent each after the former announced the number of shares it will allot to shareholders of the latter on merger of the two. “The Grasim stock had taken a beating because the structure of the deal that got reported was baseless. The demerger and listing of the financial services business will unlock value for shareholders.”, — Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group. The Aditya Birla Group on Thursday announced a plan to merge Aditya Birla Nuvo Ltd (ABNL) with Grasim Industries to c;reate an entity with combined revenue of Rs.60,000 crore. The exchange ratio would be adjusted accordingly to take into account the effect of the sub-division. The merger is basically to unlock value for investors as the financial services business, which was nurtured by Aditya Birla Nuvo, has grown substantially over time, said Birla. Revised Date: 02/07/2020 Length: 13 pages (6 pages of text) Product Type: Case (Field) Source: Ivey/ISB. Aditya Birla Management Corporation Private Limited, 3 equity shares of Grasim for every 10 equity shares of Aditya Birla Nuvo, 7 shares of Aditya Birla Financial Services for every one equity share of Grasim (post merger). “The proposed transaction will c;reate a combined entity with $9 billion revenues, EBITDA of Rs 12,000 crore and EBIDTA margins of 19 per cent,” Kumar Mangalam Birla, Chairman, Aditya Birla Group told reporters. Mumbai: Grasim Industries has bounced back well from the controversial proposal to merge the Group company Aditya Birla Nuvo Limited with Itself and subsequent spin off of financial services. The transaction which is subject to regulatory approvals would be implemented in two phases. In an exclusive chat with ET Now, Sushil Agarwal, Group CFO, Aditya Birla Group speaks about the big Grasim-Nuvo merger. The board of Grasim has also recommended sub-division of its equity shares of Rs.10 each into five equity shares of Rs. On August 11, 2016, the chairman of Aditya Birla Group (ABG) announced that ABG would merge Aditya Birla Nuvo … Mumbai: The Aditya Birla Group is merging two of its main companies, Aditya Birla Nuvo Ltd (Nuvo) and Grasim Industries Ltd, both of which also … “It''s a win-win for shareholders of both companies as Grasim shareholders will get access to high-growth businesses of financial services and telecommunications while Nuvo shareholders get strong cash flow business of cement and VSF.”. In April 2016, Aditya Birla Nuovo got approval for merger of itself into Grasim Industries. “With diverse businesses spanning manufacturing and services, the combined company provides a play on India’s growth story. “The proposed restructuring will c;reate one of India’s largest, well-diversified companies with a healthy mix of businesses with steady cash flows and long-term growth opportunities. The Aditya Birla Group on Thursday announced a plan to merge Aditya Birla Nuvo Ltd (ABNL) with Grasim Industries to c;reate an entity with combined revenue of Rs.60,000 crore. Mr. Birla denied reports that the merger was effected to give Idea Cellular access to strong cash flows ahead of the spectrum bidding process. The demerger and listing of the financial services business will unlock value for shareholders,” Birla said. Back in 2017, NCLT Ahmedabad approved the merger of Aditya Birla Nuvo and Grasim Industries. In May last year, Aditya Birla Nuvo announced merger of all its branded apparel businesses into one entity, Pantaloons Fashion & Retail now known as Aditya Birla Fashion and Retail. Win-win situation Mumbai: The shareholders of Grasim Industries Limited (“Grasim”), Aditya Birla Nuvo Limited (“ABNL”) and Aditya Birla Financial Services Limited (“ABFSL”) at their meetings held on 6th and 10th April 2017 respectively have approved the Scheme of amalgamation of ABNL with Grasim followed by the demerger and listing of the Financial Services business, in line with … Promoter holding Dilip Gaur, Managing Director of Grasim, said the merger provides Grasim shareholders with exposure to fast-growing sectors, including telecom and financial services. Barnali Chaklader, Garima Chaklader. The deal will be done in two steps. “The merger is creating a complex shareholding structure and is value disruptive for the retail shareholders,” Investment advisor S.P. Post-merger, the cement business will contribute 42 per cent followed by textile (17 per cent) and telecom (16 per cent). With the merger, the Aditya Birla Group decided to hive off its financial services business into a … The Aditya Birla Group on Thursday announced a plan to merge Aditya Birla Nuvo Ltd (ABNL) with Grasim Industries to create an entity with combined revenue of ₹60,000 crore. In other words, a shareholder having 100 Grasim shares will receive 700 ABFSL shares. Aditya Birla Group is a premium global conglomerate, headquartered in Worli, Mumbai, India. “The merger will unlock value for shareholders,” said Kumar Managalam Birla, Chairman of the Aditya Birla Group. The company has gone out of the way to explain the proposal to Investors even as there are … With the merger, the Aditya Birla Group decided to hive off its financial services business into a separate entity, which will be listed later. This will be followed by the demerger of the financial services business into a separate listed company. Aiming to create a strong presence in the financial services category, the $41 billion Aditya Birla Group on Thursday announced a mega restructuring plan by merging group firms Aditya Birla Nuvo Ltd and Grasim. Aditya Birla Nuvo Limited (Nuvo) is a conglomerate operating in the service and manufacturing sectors. The Honourable National Company Law Tribunal at Ahmedabad, had approved the merger of Aditya Birla Nuvo and Grasim Industries to be followed by the listing of Aditya Birla … Aditya Birla Nuvo, formerly called Indian Rayon & Industries, will cease to exist after the merger. Product Number: 9B20N003. The Financials. ABFSL will be listed by May-June 2017, Mr. Birla said. Kumar Mangalam Birla, Chairman, Aditya Birla Group, said the transaction was aimed at finding synergies between the various companies in the group and at unlocking value. Grasim-Aditya Birla Nuvo merger ''on track'' 01 November, 2016 | BusinessLine. Aditya Birla Nuvo and Grasim Industries merger has been given a thumbs down by analysts who have called it a ‘dampener’. Q4 target The transaction will be completed by the end of the current fiscal; the financial services arm will be listed next year. For the demerger of the financial services business into ABFSL, each shareholder of Grasim (post-merger) will receive seven equity shares in ABFSL for every one equity share held in Grasim which means a shareholder holding 100 shares in Grasim will receive 700 shares in ABFSL. Mr. Sandeep Gurumurthi Group Head, Communication & Brand Post-merger, Grasim, with an aggregate turnover of Rs.59,766 crore and EBITDA of Rs.11,961 crore for the year ended March 31, 2016, will become India’s top cement company and will be amongst the top 10 diversified private NBFCs in India. The Aditya Birla Group is in the League of Fortune 500. “It is done to increase promoters’ shareholding. A part of this two-step restructuring may involve the merger of Grasim and parts of Aditya Birla Nuvo, which is likely to be followed by the hiving-off of the financial services business of AB Nuvo into a separate company. It’s this demerger that has become a point of contention for the tax authorities. two each. Publication Date: 02/07/2020. The company's businesses have grown into global powerhouses in a wide range of sectors – metals, … ABNL has interests in Aditya Birla Financial Services … It will be the third-ranked telecom operator besides being among the top four private sector life insurance and asset management companies in India. The merged entity had a revenue of Rs 59,760 crore, an operating profit of Rs … Grasim has a cash surplus of Rs.500 crore, while Aditya Birla Nuvo has net debt of Rs.2,500 crore. Swap ratio Aditya Birla Management Corporation Private Limited, “The proposed restructuring will c;reate one of India’s largest, well-diversified companies with a healthy mix of businesses with steady cash flows and long-term growth opportunities. Minority shareholders of billionaire Kumar Mangalam Birla-led Grasim Industries have approved its mega-merger with Aditya Birla Nuvo Ltd (ABNL) to c;reate a nearly Rs 60,000-crore diversified entity. Idea Cellular The Grasim Industries–Aditya Birla Nuvo Limited Merger Wealth Creation Case Solution Background Set the scene background information, relevant facts, and the most important issues. Kumar Mangalam Birla, chairman of Aditya Birla Group, on Thursday announced the merger of Aditya Birla Nuvo (ABNL) with Grasim Industries to create an entity with Rs 60,000-crore annual revenue or about $9 billion. The merged entity will be used to raise funds for debt-laden Idea Cellular to bid for upcoming spectrum auctions.”, Mr. Sandeep Gurumurthi Group Head, Communication & Brand Demonstrate that you have researched the problems in this The Grasim Industries–Aditya Birla Nuvo Limited Merger Wealth Creation case study. Its service sector businesses include Financial Services (Life Insurance, Asset Management, NBFC, Housing Finance, Private Equity, Broking, Wealth Management, online money management and general insurance advisory) and Telecom through investments in Idea … So, the restructured Grasim will have net debt of Rs.2,000 crore after the merger. When the deal was first announced, there was a lot of trepidation and concern in the market regarding the rationale behind the deal and regarding the debt transfer. The demerger and listing of the financial services will unlock value for shareholders,” Mr.Birla said. The current restructuring of group holdings has nothing to do with Idea whatsoever, he said. In addition, he said, Grasim investors would get exposure to a pure-play financial services business that has huge growth potential as the economy grows. The record date is fixed as October 8. For the merger of ABNL with Grasim, shareholders of ABNL will get three new Grasim equity shares for every 10 ABNL shares held. Share. “The shareholders of Grasim, ABNL and Aditya Birla Financial Service Ltd at their meetings held on April 6 and April 10, 2017, respectively, have approved the scheme of … “In aggregate each shareholder of ABNL holding 100 shares will receive 30 shares in Grasim and 210 shares in ABFSL,” according to statement from the Aditya Birla Group. The Board also … The promoter group will hold 39 per cent in the merged entity and the balance will be with the public. “With diverse businesses spanning manufacturing and services, the combined company provides a play on India’s growth story. Tulsian said. In aggregate, anyone holding 100 ABNL shares will receive 30 shares in Grasim and 210 shares in ABFSL. First, ABNL will be merged into Grasim; that will be followed by the demerger of the financial services business. Under the existing structure, the promoter holds 31.3 per cent in Grasim and 58.4 per cent in Aditya Birla Nuvo. Dispelling investors’ concern about Idea Cellular using Grasim Industries’ reserves to take on growing competition from soon-to-be-launched RJio, Birla said Idea is a separate listed entity and is capable of raising funds on its own. Aditya Birla Financial Services Ltd (currently under Nuvo) contributes significantly to the revenues of ABNL. Post the merger, they spun off the financial services business, including the mutual fund, NBFC, life insurance and payments bank under Aditya Birla Capital. The transaction is expected to be completed by the fourth quarter of this year or in the first quarter of the next financial year. 1) The corporate reorganisation will see the demerger of Aditya Birla Financial Services from AB Nuvo and that separate entity will be listed on stock exchanges. Its funds under management stand at Rs … Post-restructuring, promoters will own 17 per cent in the financial services business; Grasim will own 57 per cent. Demerger of Grasim’s financial services undertaking to Aditya Birla Capital was also part of the restructuring exercise which received the tribunal’s approval. Grasim Industries split its shares of face value Rs 10 each into five face value Rs 2 each on Thursday. For the demerger of the financial services business into ABFSL, shareholders of Grasim (post-merger) will receive seven ABFSL equity shares for every Grasim equity share held. For the merger of ABNL with Grasim, each shareholder of ABNL will get three new equity shares of Grasim for every 10 equity shares held in ABNL which means a shareholder holding 100 shares in ANBL will receive 30 shares in Grasim. Edited excerpts: Congratulations on those crucial shareholders' nods coming in. First, ABNL would merge into Grasim and thereafter the financial services business would be demerged resulting in a listed financial services company with 57 per cent owned by post-merger Grasim and the balance being held by post-merger Grasim shareholders on a proportionate basis. In a major restructuring exercise in the Aditya Birla group, Aditya Birla Nuvo Limited (ABNL) has decided to merge with Grasim Industries and subsequently go for the demerger and listing of its financial services business through a composite scheme of arrangement. All financial services businesses, including insurance and payments bank, will be listed on stock exchanges. Combined entity In its letter to the stock … Grasim will again be seen as the holding company for financial services and hence will trade at holding company’s discount. The merger will also consolidate the cross-holding within the group as both companies own stakes in Idea Cellular, Aditya Birla Fashion and Retail and Hindalco Industries. Aditya Birla Nuvo Ltd (ABNL) will merge with Grasim Industries Ltd in a bid to unlock shareholder value and c;reate a $9 billion (Rs 59,766 crore) enterprise. The restructuring involves two steps namely merger of Aditya Birla Nuvo with Grasim Industries and demerger of its financial services business resulting in a listed financial services company with 57% owned by post-merger Grasim Industries and the remaining shares held by post-merger Grasim Industries shareholders on a proportionate basis. NEW DELHI: Pantaloons Fashion & Retail Ltd today said it has fixed January 21 as the Record Date for determining the entitlement of the equity shareholders of Aditya Birla Nuvo Ltd upon merger of Aditya Birla Group's apparel businesses. The financial services and chemicals businesses will contribute 15 and 9 per cent, respectively. Aditya Birla Nuvo Ltd (ABNL) will merge with Grasim Industries Ltd in a bid to unlock shareholder value and c;reate a $9 billion (Rs 59,766 crore) enterprise. | Updated on January 11, 2018 Published on July 17, 2017 Shares of Grasim Industries and Aditya Birla Nuvo will remain in focus ahead of the merger. Under this plan, the financial services business will be demerged into a newly formed company — Aditya Birla Financial Services Ltd (ABFSL), which will be listed separately. The balance 1 per cent will come from solar and insulator businesses. That the deal is done to fund Idea is not correct and it''s like jumping the gun.” He said there will be no exposure to Idea''s debt for the new merged entity. The aim of AB Nuvo-Grasim merger is not to fund Idea Cellular for battle with RJio: KM Birla 13 Aug, 2016, 10.46 AM IST "The key leverage from the merger will be for its financial services business that can avail of a strong balance sheet of a large, diversified group that is banking on India’s growth." The board of Grasim has also recommended sub-division of its equity shares of Rs.10 each into five equity shares of Rs.2 each. We have chalked down the ten important things you must know about deal. The group will hive off its financial services business into a separate entity. Aditya Birla Financial Services is currently a 100% subsidiary which houses the non-banking financial company, housing finance, asset management, general … Financial services business to be demerged into a new company; will unlock value for shareholders: Kumar Mangalam Birla. (Bloomberg) -- Shareholders of Aditya Birla Nuvo Ltd., controlled by billionaire Kumar Mangalam Birla, approved plans for a merger with Grasim Industries Ltd. that would create a firm with $9 billion in combined revenue. The Grasim Industries–Aditya Birla Nuvo Limited Merger: Wealth Creation? Sectoral contribution Healthy mix of businesses A combined 989,267 shares changed hands on the counter on the NSE and BSE. 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