Increasing promoter stake main motive behind AB Nuvo merger:Pros

The main motive behind the merger of Aditya Birla Nuvo and Grasim is to increase the promoter stake in the merged entitiy to above 40 percent. The promoter stake in Grasim is only around 32 percent while promoter stake in AB Nuvo is around 58 percent. Merging the two entities would bring it above 40 percent, says SP Tulsian, sptulsian.com.Grasim is the stock that will be effected the most in Monday's trade, says SP Tulsian. The Rs 35,000 crore debt of AB Nuvo will have to be taken up by Grasim. This fact will not bode well with the shareholders, he says. He has never seen such a negative move against the minority shareholders, he says. But on the contrary, Rakesh Arora, market expert is of the opinion that AB Nuvo is going to be a bigger loser from this move. AB Nuvo has been an incubation centre for new businesses of the Aditya Birla Group, he says. It would build businesses and help list them, ensuring there was value unlocking. After this merger, with all the financial services going out, there may not be any value unlocking, he says.Watch video for more.