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Akzo Nobel India Ltd (formerly ICI India) has obtained approvals from two High Courts for a merger proposal.
The merger entails amalgamation of three unlisted local group entities with the company. The company, however, is awaiting the approval from the Bombay High Court.
The Calcutta High Court in its order on April 24 had approved the Scheme of Amalgamation of Akzo Nobel Car Refinishes India Pvt Ltd, Akzo Nobel Coatings India Pvt Ltd, and Akzo Nobel Chemicals (India) Ltd with Akzo Nobel India.
The merger scheme for the two – Akzo Nobel Car Refinishes and Akzo Nobel Coatings – has also been approved by the Karnataka High Court.
The application of Akzo Nobel Chemicals is pending hearing by Bombay High Court.
The effective date of amalgamation would be determined after receipt of all approvals and on completion of formalities, Akzo Nobel informed the exchanges.
Shareholders of Akzo Nobel had approved the proposal in February. But 23.15 per cent of the 28.99 million valid votes polled at a court-convened shareholder meeting, were against the resolution.
A large chunk of minority shareholders opposed the move as they feared their interests were not being protected.
Post-amalgamation, the promoters will increase their stake by as much as 10 per cent. Institutional investors – ICICI Prudential Life, LIC, New India Assurance, Oriental Insurance, GIC, UTI– will see their shareholding reduce by three per cent.
InGovern, the proxy advisory service that recommended voting against the resolution, stated that for 14 per cent additional profits on account of the merger, public shareholders were asked to risk a dilution of 23.20 per cent in their shareholding.
It also noted that there were unsecured loans of Rs 113.74 crore in the books of the two entities being merged.
According to InGovern, these unsecured loans form a significant percentage of the balance sheets of the unlisted entities.
> jayanta_mallick@thehindu.co.in
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