Advanta to merge with UPL

In the outcome of the meeting between Advanta & United Phosphorus Ltd.(UPL) the Board of Directors of both companies decided to merge the companies, subject to necessary approvals. The proposal will be implemented by the scheme of amalgamation.

More than 90 per cent sales of UPL Ltd. comes from Agro products & the remaining is from Non-Agro and Un-allocable product segment. The merger will enhance the presence of UPL across the agri-inputs value chain. It will increase the geographical reach, market penetration and customer access.

UPL can achieve economies of scale, greater efficiency, optimization of logistics and a vast distribution network with the merger which will help the company in annual cost saving of Rs.900 million envisaged.

On the other hand the transferor company Advanta Ltd. will benefit from the strong distribution channel of UPL and the presence of UPL in Mexico, Brazil, Colombia, China. Advanta will also be able to fast track its own growth path.

Both companies can see reduction in administrative expenses, interest and tax cost after the merger through optimal utilization of resource, avoidance of duplication and better financial strength.In terms of financials, the revenue of UPL is 12090.52 crores for year ending March 2015 an increase of 12.25 per cent on yearly basis. The Net profit is 1144.03 crores, which is an increase of 20.45 per cent on yearly basis. The revenue of Advanta is Rs.1512.55 crores for year ending December 2014, an increase of 20.50 per cent on yearly basis and net profit is Rs.83.54 crores, an increase of 87.77 per cent. So, with good growth in revenue and net profit, the amalgamation will help both companies to achieve good growth, and increase financial strength.

Promoters company UPL has 48.44 per cent stake in Advanta as of September 2015. UPL's shareholding in Advanta will stand cancelled on amalgamation. After the amalgamation scheme the shareholder holding 1 share of Advanta will be issued 1 UPL equity share, 3 redeemable preference shares of UPL.

UPL Limited is a generic agrochemical company. The Company is engaged in the business of manufacturing and marketing crop protection chemicals. It is also engaged in offering crop protection solutions. UPL is trading at Rs.444.35, which 2.98 per cent down than its previous close on 23rd November.

Advanta Limited is an India-based transactional plant genetics company. The Company is engaged in research and development of hybrid seeds using germplasm. The Company utilizes Molecular Marker Technology, while building biotech traits through seeds.Advanta is trading at Rs.487.50, 2.38 per cent up from its previous close on 23rd November, 2015.