The boards said the financial services business would be carved out into a new entity. Shares of AB Nuvo nosedived 18.08 per cent to hit a low of Rs 1,196.70 on Friday morning, while Grasim slumped 5.77 per cent to Rs 4,277.
The companies said the merger would give investors a diversified portfolio of cement, financial Services and telecom businesses, creating a play on India’s consumption story. However, analysts estimated the deal to be unfavourable for miniority shareholders.
“Our decision tree based analysis suggests the holding company's discount may have to narrow to less than 35 per cent for investors to make money, if the deal gets all approvals, including that from minority shareholders. A 10 per cent higher discount lowers the 12-month target pride by Rs 610 a share,” Edelweiss Securities said in a note.
“Considering that the risks in the cement sector are receding slowly, we would rather own pure plays like Shree Cement and UltraTech Cement,” the brokerage said.
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