Nearly 93% of the minority investors in Grasim Industries Limited on Friday voted in favour of group chairperson Kumar Mangalam Birla’s plan to merge the company with affiliate Aditya Birla Nuvo Limited. The voting was held in Nagda, Madhya Pradesh. ABNL shareholders, on the other hand, will cast their votes on April 10, reported Business Standard.
Following the news, shares of Grasim went up by 0.1% while those of ABNL climbed up 0.42%, reported Bloomberg. The merger, which was mooted in August last year, is likely to increase Birla’s hold on the overall business. Once the deal is through, the Birla family’s holding will go up from 31% to 39% in the merged entity. After the merger, Aditya Birla financial Services Ltd will be separated through a few schemes of arrangement, and Grasim will hold 57% stake in the demerged financial services company.
Initially the merger plan had met with stiff resistance from the investors, resulting in a drop in share prices of both Grasim and ABNL. An institutional investor told Business Standard that these shareholders, who own 68.7% stake in Grasim, were sceptical of the deal. They believed that after the merger with ABNL, funds from Grasim will be used to support Idea Cellular’s operations.
However, they agreed to give their nod to the merger plan after their concerns were put to rest following the news that this group will have 26% stake in the merged entity of Idea-Vodafone. The business tycoon also pushed for the merger by saying that the new entity will have access to more resources, which in turn, will help expansion of the group.
On March 20, the Birla group had announced the merger of Idea Cellular with Vodafone India. This will create the country’s largest telecom company with Rs 80,000 crore in revenue. Kumar Mangalam Birla will head the merged company. Vodafone will control 45.1% stakes in the new company, while Idea Cellular will have 26% shares and the rest will be owned by the public. The merger will be completed by 2018 and the new entity will eventually get a new name and identity.
Limited-time offer: Big stories, small price. Keep independent media alive. Become a Scroll member today!
Our journalism is for everyone. But you can get special privileges by buying an annual Scroll Membership. Sign up today!