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Aditya Birla Nuvo to merge with Grasim Industries

Kumar Mangalam Birla, owner of diversified conglomerate Aditya Birla Group has increased his shareholding in Aditya Birla Nuvo by purchasing shares from minority investors including 3.86 per cent from Anil Ambani-owned Reliance Mutual Fund for Rs 775 crores. The merger will make Grasim one of India's largest diversified companies with a healthy mix of business with steady cash flows and long-term growth opportunities.

The plan includes listing the financial services company, with Grasim owning 57 per cent, the promoters 16.6 per cent and the rest by the public. With this, Aditya Birla Nuvo will merge with Grasim Industries. The stake purchases that boosted Birla's holdings to 62.77 per cent from 58.39 per cent, invited criticism from proxy advisory firms and local investors, who said it was against interests of minority shareholders. Reliance MF, the second-largest shareholder after Life Insurance Corporation of India, sold almost its entire stake.

Birla's unlisted private firms Turquoise Investments & Finance and IGH Holdings bought about 57 lakh shares between December 2016 and January 2017. Apart from Reliance Mutual Fund, the identity of the other sellers could not be ascertained. It has been also noted that the acquisition is part of its plan to increase shareholding in group companies under the creeping acquisition route allowed by the Securities & Exchange Board of India.