UPL board approves merger with Advanta

 UPL, a global generic crop protection, chemicals and seeds company, has said on Monday that its board members have unanimously approved its merger with Advanta.

The merger with Advanta will help UPL to expand its product portfolio in the agri-value chain and will give it an opportunity to engage directly with farmers.

The merger will be effected through a court-approved Scheme of Amalgamation, UPL (formerly known as United Phosphorus Ltd) cited in a filing to the BSE.

For the merger deal:

-- Each Advanta shareholder holding one equity share will be issued an equity share of UPL

-- For resident shareholders of Advanta, one share will fetch three optionally redeemable convertible preference shares (of par value Rs 10 each) in UPL

-- Non-resident shareholders of Advanta holding one share of the company will get three compulsorily convertible preference shares (of par value Rs 10 each) in UPL

-- The Global Depository Receipt (GDR) holders of Advanta will get 1.06 new GDRs in UPL, the statement said.

"Based on the recommended swap ratio, UPL will issue 77.45 million new equity shares with face value of Rs 2 each and 181.83 million new preference shares with face value of Rs 10 each based on Advanta shareholding pattern as on November 20, 2015 (assuming full conversion of FCCBs and exercising of all ESOPs)," it added.

"The merger follows UPL's philosopy 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,"said R D Shroff, Chairman of UPL in a statement filed to BSE.

"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," said Jai Shroff, Global CEO, UPL and Vice Chairman, Advanta.

Advanta will be benefited by the strong global distribution network of UPL, which will help the company to boost its growth plans.

"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," Jai Shroff added.

The merger intends to achieve larger product portfolio, economies of scale, efficiency, optimisation of logistic and distribution network and other related economies, said UPL in a statement.

It will result in access to newer territories, enhance coverage in existing markets and leveraging channel capabilities, UPL added.

The company expects to achieve an annual cost savings of Rs 90 crore through the merger.

On Monday, UPL shares were trading at Rs 448.20, down Rs 9.80, or 2.14% per piece at 1217 hours. 

However, Advanta shares were trading at Rs 488.40, up Rs 12.25, or 2.57% per piece at 1216 hours.