Advanta, UPL merger gets board okays

The board of directors of agro chemical company UPL and global seeds company Advanta have approved Advanta’s merger with UPL, subject to necessary approvals effective April 1, 2015.

As per the scheme, Advanta shareholders holding one equity share will be issued one share of UPL and three preference shares. Advanta GDR holders holding one GDR will be issued 1.06 GDR in UPL. Based on the recommended swap ratio, UPL will issue 77.45 million new equity shares  and 181.83 million new preference shares based on Advanta shareholding pattern as on November 20, 2015, UPL said.

The company expects to achieve annual cost savings of Rs 90 crore through the merger. The merger will result in access to newer territories, enhanced coverage in existing markets, leveraging channel capabilities. The merger intends to achieve larger product portfolio, economies of scale, efficiency, optimisation of logistic and distribution network and other related economies. The combined business would also benefit from the resources strength to carry on consolidated operations through utilisation of resources, avoidance of duplication and better financial strength, UPL said.

Citigroup Global Markets India acted as financial advisor to UPL. It provided an opinion on the fairness, from a financial point of view, and as of the date of the opinion, on the proposed exchange ratio to the shareholders of UPL (other than promoter and promoter group).

Kotak Investment Banking was the financial advisor to Advanta and provided opinion on the fairness from a financial point of view on the proposed swap ratio to the shareholders of Advanta. J Sagar Associates was the legal advisor to UPL & Advanta.

“The merger follows UPL’s philosophy of creation of sustainable Shareholder value through accelerated growth and simplified group structure. This is a significant step in our goal to be among the largest agrochemical and seed companies globally,” UPL chairman R D Shroff 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,” UPL Chief Executive Officer and Advanta Vice Chairman Jai Shroff said.