The chairman of the Aditya Birla Group met LIC’s officiating chairman VK Sharma to explain to him the merger of AB Nuvo and Grasim.
MUMBAI: Private equity investor Ashish Dhawan may be opposed to Aditya Birla Nuvo-Grasim merger, but billionaire Kumar Mangalam Birla may have got the backing of the biggest institutional investor in the group companies, the LIC India.
The chairman of the Aditya Birla Group met LIC’s officiating chairman VK Sharma to explain to him the merger of AB Nuvo and Grasim. LIC, which rarely takes a stance contrary to that of the management, may decide to give its go-ahead in a week or two.
“Birla met with the senior management of the Life Insurance Corp, to explain the details of the deal,” said a senior LIC executive.”LIC will decide on whether to support the deal in 10-15 days,” said the executive, who did not wish to be identified.
The Aditya Birla Group had on August 11 announced a restructuring plan for two of its listed group entities, Grasim Industries and Aditya Birla Nuvo. Both the companies have lost market share since the announcement of the deal. LIC owns 6% in Grasim and 4.66% in Aditya Birla Nuvo.
Many analysts have been of the view that restructuring does not benefit minority shareholders.Some said it only adds more layers of confusion and complexity with a bunch of unrelated businesses under one umbrella.
Religare India said that the announced merger is likely to be a mood dampener.
Both Grasim and Aditya Birla Nuvo are holding companies. As per the proposed plan, Aditya Birla Nuvo will first be merged with Grasim Industries. Shareholders of Aditya Birla Nuvo will get three shares of Grasim for every 10 shares they hold.
Thereafter, Aditya Birla Nuvo’s financial services business -Aditya Birla Financial Services -will be demerged and listed as a separate entity.
A shareholder holding one equity share of the new Grasim will get seven shares of Aditya Birla Financial Services.