Aditya Birla Nuvo Sinks 25% On Merger Announcement With Grasim

Aditya Birla Nuvo sank as much as 25 per cent on Friday following its merger announcement with subsidiary Grasim Industries.

Post the merger, Aditya Birla Nuvo's financial services business will be spun off into a separate entity.

Under the deal, shareholders of Aditya Birla Nuvo will get 3 shares of Grasim for every 10 shares of Aditya Birla Nuvo. When Aditya Birla Financial Services is spun off from Grasim, shareholders will get seven shares of the financial services company for each share held in Grasim.
Analysts say the share swap ratio appears to be in favour of Grasim.

"Grasim, which is already a holding company becomes even more bigger conglomerate, to that extent it is slightly negative. Already it is trading at 40-50 per cent discount to its subsidiary Ultratech, now I think the discount will widen further given all these unrelated business are coming in to it," market expert Rakesh Arora told NDTV Profit.

"As of now it is not clear what benefit the minority shareholders are getting," he further added.

Meanwhile, global brokerage CLSA said the merger adds complexity and raises uncertainty on capital allocation.

As of 10.03 a.m. Aditya Birla Nuvo shares traded 18.60 per cent lower at Rs 1,271.9 while Grasim Industries shares were down 2.1 per cent lower at Rs 4,444.25. In comparision the broader Nifty was up 0.84 per cent.

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