Indo Gulf, Birla Global to merge into Indian Rayon to form Aditya Birla Nuvo

Our Corporate Bureau
12 September 2005

Mumbai: Consolidating its disparate businesses, the Aditya Birla Group at a board meeting on Sunday approved the proposal to merge group companies Indo Gulf Fertilisers and Birla Global Finance into Indian Rayon Industries. The merger would form new company Aditya Birla Nuvo.

It has been decided to fix the share swap ratio at 1:3, that is Indo Gulf shareholders will get one share of Indian Rayon for every three shares held. Similarly Birla Global shareholders will get one Indian Rayon share against three of Birla Global shares.

The share swap ratios were based on the valuations done by Bansi S Mehta and Co and Deloitte, Haskins and Sells. Amarchand Mangaldas & Suresh Shroff and Co was the legal adviser.

Considered to be among the major consolidations in recent times the restructuring has been valued at over Rs 5,000 crore.

The merger will be effective from 1 September 2005.

Speaking to the media here after the board meetings, Kumar Mangalam Birla, chairman, Aditya Birla Group, said the main reason behind the proposed merger was that the fertiliser business had not lived up to expectations and the group did not think that the sector would be deregulated in the future. He also said the employees of Indo Gulf and Birla Global Finance would be absorbed by the new entity. The promoters' holdings in the merged entity will be 38 per cent.