Boards of UPL Limited and Advanta Limited — two companies engaged in agriculture-related business — approved a merger of the two companies in a share swap deal.
According to the deal, each Advanta shareholder owning one equity share of the company will get 1 UPL share, plus 3 optionally redeemable convertible preference shares of par value Rs 10 each in UPL in case of residential shareholders.
UPL expects to achieve annual cost savings of Rs. 900 million through the merger and give it access to newer territories while providing enhanced coverage in existing markets. The combined entity will be better able to levere channel capabilities.
In case of shareholders based outside India, they will get 3 compulsorily convertible preference shares in UPL instead of the optionally convertible ones. On conversion, 471 preference shares to be converted into 10 equity shares of UPL.
In case of global depositary receipts, Advanta GDR holders holding will get 1.06 GDR in UPL for each one held.
As a result of all this, UPL will issue 77.45 million new equity shares of face value Rs 2 and 181.83 million new preference shares of face value Rs 10.
“The merger follows UPL’s philosophy of creation of sustainable Shareholder value through accelerated growth and simplified group structure,” said R D Shroff, Chairman of UPL.
“This is a significant step in our goal to be among the largest agrochemical + seed companies globally”
The deal will provide improved customer access through early and direct engagement.
It will also result in a larger product portfolio, economies of scale, efficiency, optimisation of logistic and distribution network and other related economies, the companies said.
“The combined business would also benefit from the resources strength to carry on consolidated operations through optimum utilization of resources, avoidance of duplication and better financial strength.”
Jai Shroff, Global CEO, UPL and Vice Chairman Advanta, said: “With this merger, UPL expands its product portfolio to cover the agri-value chain and provides UPL with an opportunity to engage directly with the farmers. Advanta benefits from the strong global distribution network of UPL and will be able to fast track its growth plans on the back of strong balance sheet of the combined entity”.