Market players welcome merger

The market players have cautiously welcomed the announcement of merging Indo-Gulf Fertilisers Ltd (Indo Gulf) and Birla Global finance Ltd (...

The market players have cautiously welcomed the announcement of merging Indo-Gulf Fertilisers Ltd (Indo Gulf) and Birla Global finance Ltd (Birla Global) with Indian Rayon and Industries Ltd. (Indian Rayon), another leading company of AV Birla group.

Marketmen are of the opinion that the merger ratio of one share of Indian Rayon to be given to the shareholders of Indo Gulf and Birla Global for every three shares held by them in the respective company, is fair and reasonable.

According to Gagan Banga, executive director, India Bulls Financial Services, ‘‘The merger announcement is a move towards consolidating the businesses and its makes immense sense for shareholders of all the three companies. The share prices of these three companies have risen sharply recently and from the point of view of run-up in prices, the ratio seems to be disproportionate.’’

Milind Pradhan, head of equities, UTI Securities said, ‘‘The merger ratio announced for the shareholders of Indo Gulf Fertilisers and Birla Global Finance is looking quite reasonable. Looking at the balance sheet size and taking into account the assets and liabilities of these firms, the ratio is fair, as it is not the share price but other constituents of balance sheet that play more vital role in deciding the ratio. The share price tend to get adjusted following any major announcement.’’