India's largest agro-chemicals company by market capitalisation, UPL Limited, on October 21, announced a sweeping restructuring of its global crop protection, seeds and Indian operations to unlock value for shareholders and streamline verticals.
"Our commitment to transform the global food value chain will now receive even more impetus with the creation of these distinct pure-play platforms," Jai Shroff, Global Chief Executive Officer at UPL Limited, said in a press statement.
The company has decided to transfer its Indian crop protection and agriculture technology business on a slump sale basis to UPL Sustainable Agri Solutions.
As part of the transaction, UPL will sell 9.09 percent stake in UPL Sustainable Agri Solutions to TPG, Abu Dhabi Investment Authority and Brookefield for $200 million. The minority stake-sale in UPL Sustainable Agri Solution values the new subsidiary of UPL at Rs 17,380 crore.
In another transaction, UPL will split its international crop protections and seeds businesses into two separate entities.
UPL Cayman Limited will now house the company's global crop protection business, while the India seed and international seed businesses will come under Advanta Enterprises.
UPL said that TPG and Abu Dhabi Investment will hold 22.2 percent stake in UPL Cayman, the company's international pure-play crop protection business, and sell their stake in the international seed business and other global business for $241 million.
Additionally, UPL said that it has sold a 13.33 percent stake in the newly-formed Advanta Enterprises, the company's India and global seed business, for $300 million at a valuation of Rs 18,450 crore.
"This will enable to bring in enhanced focus, ensure better allocation and utilisation of resources and outcome-oriented solutions to farmers," Shroff said.
The parent entity, UPL Limited, which is listed on the Indian bourses, will now become a manufacturing and specialty chemicals platform with revenues of nearly Rs 15,000 crore post the demerger process.
In essence, UPL has created four new major verticals of Indian crop protection, international crop protection, global seeds, and specialty chemicals through the restructuring process.
The company's restructuring drive comes in the backdrop of UPL's efforts to trim down its overall debt position, which stood at $3.8 billion at the end of the June quarter. In the June quarter alone, UPL’s gross debt jumped $398 million.
UPL said that the inflow received from sale of minority stakes in UPL Sustainable Agri Solutions and Advanta Enterprises will be partly used to repay its existing debt.
The company expects the entire restructuring process to conclude over the next 45-90 days, subject to various regulatory approvals.
On October 21, shares of UPL ended 1.6 percent lower at Rs 702 on the National Stock Exchange.
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