Aditya Birla Nuvo Shareholders Sign Off on Grasim Merger Plan

  • Deal would give tycoon Birla tighter grip on conglomerate
  • Transaction still needs some regulatory, legal approvals

Kumar Mangalam Birla.

Photographer: Udit Kulshrestha/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.

About 83 percent of ABNL minority shareholder votes cast were in favor of a proposal to merge with affiliate Grasim, according to a statement from ABNL Monday. Grasim’s minority shareholders already voted their consent to the merger plan, according to an April 6 statement. The transaction still needs approvals from the company law tribunal, markets regulator and exchanges.

The deal, an overhaul that also involves the spinoff of a financial services unit currently under ABNL, would help tighten the tycoon’s grip on a conglomerate with more than $40 billion in annual revenue. The transaction would increase Birla family stakes in the new entity to 39 percent from the 31 percent it holds in Grasim, according to a company presentation. ABNL has stakes in companies ranging from a mobile-phone operator to a life insurer.

When Birla proposed combining Grasim and ABNL in August, investors were spooked. Shares of Grasim tumbled and ABNL fell to a record low amid concerns the deal and transfer of debt would not benefit minority shareholders. Birla has argued that the combined entity would have larger resources to fund expansion in the world’s fastest-growing major economy.

Both Grasim and ABNL shares have since recovered to levels near where they were before the merger announcement.

ABNL shares fell 0.1 percent to 1,559.50 rupees at 10:54 a.m. in Mumbai on Tuesday. Grasim was down 0.2 percent.

Birla has been making deals across his businesses. He’s in the process of combining his mobile-phone unit Idea Cellular Ltd. with Vodafone Group Plc’s Indian business to form the nation’s largest wireless carrier. ABNL-controlled UltraTech Cement Ltd. bought cement units from debt-laden Jaiprakash Associates Ltd. last year.

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