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Grasim Industries has received approval from its shareholders to merge its Group company Aditya Birla Nuvo with itself on Friday.
Last August, Kumar Mangalam Birla-owned Aditya Birla Group proposed to merge both the companies and spin off the financial services business, including mutual fund, NBFC, life insurance and payments bank under Aditya Birla Financial Services and list it on the exchanges.
Though the proposal attracted resistance initially, most investors including institutional investors were convinced of the move after understanding the synergy behind the move. Aditya Birla Nuvo investors will be voting on the merger proposal in a meeting to be held on April 10. The entire merger process is expected to be completed by the first half of this fiscal.
In a shareholders meeting convened under the National Company Law Tribunal guidance on Friday, over 93 per cent of shareholders voted in favour of the proposal through various modes. Over 92 per cent of the institutional investors who exercised their voting rights have favoured the proposal.
As part of the merger, Grasim will issue three shares for every 10 shares of Aditya Birla Nuvo held by investors. Post-merger, Grasim investors will get seven shares of Aditya Birla Financial Services for every one equity share they own. This will ensure that Grasim and Aditya Birla Nuvo investors own 25 per cent of Aditya Birla Financial Services.
Post merger, promoter holding in Grasim will rise to 38.8 per cent from 31.3 per cent and they will have 57.2 per cent in the newly-formed financial services company.
To keep Idea stake Grasim will continue to hold 28 per cent in Idea Cellular, which is in the process of merging Vodafone’s India business with itself due to intense competition from the latest entrant in the telecom space Reliance Jio. Post-restructuring, Grasim will have a consolidated annual turnover of ₹61,500 crore with 68 per cent contribution from manufacturing sector which includes cement, textiles, chemicals, insulator and solar and 32 per cent from financial services and telecom.
Last week, Aditya Birla Nuvo received licence from the RBI to launch a payments bank under the newly-formed entity Aditya Birla Idea Payments Bank, a 51:49 joint venture between Aditya Birla Nuvo and group company Idea Cellular.
On Friday, shares of Grasim and Aditya Birla Nuvo declined 1 per cent each at ₹1,055 and ₹1,525, respectively.
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