ICICI, Anagram fix 1:15 share swap ratio

The decision of the boards of the two companies on the exchange ratio was passed on the recommendation of two leading independent chartered accountancy firms, C C Choksi and Company and Bansi S Mehta and Company. The merger is subject to necessary approvals and due confirmation of the scheme of amalgmation by the high courts of Mumbai and Gujarat. Incidentally, the ICICI share closed at Rs 105.50 on the Bombay Stock Exchange while the Anagram share traded at Rs 14.35.

“Prior to the merger becomingeffective, certain identified investment companies of the Lalbhai family (investment companies) would bring in Rs 125 crore, which would be convereted into three equity shares of ICICI on the date of the merger becoming effective, to compensate for the erosion in the networth and estimated losses on asset portfolio,” ICICI said.

In addition, ICICI will also have the benefit of backstop facility of Rs 100 crore for any further potential losses on the retail portfolio. All assets (excluding intra group assets which will be purchased by the aforesaid investment companies) and liabilities of Anagarm, outstanding as on the effective date of amalgamation would be transferred to ICICI. “ICICI will absorb the branches and employees of Anagram as per its requirements, with the balance being taken over or transferred by the promoters. In the interim, the affairs of Anagram will be conducted in trust for and on behalf of ICICI and during this period, ICICI will have the right to appoint a transition team to overseethe operations of Anagram,” it said.

The Lalbhais have proposed that the aforesaid scheme would also include an option for the public shareholers of Anagram to either continue as shareholders of the merged entity or sell their shareholding in Anagram to the investment companies at a price of Rs 18 for every equity share of face value of Rs 10. As principal shareholders of the company, the proposal was mooted by the Lalbhai family so as to offer to its minority public shareholders an equitable exit route.

According to market sources, this move marks a significant step forward in protecting shareholder value. It is felt this deal will become a benchmark for shareholder expectations in such future deals. “The retail shareholder of Anagram has every reason to smile. They have the option of getting Rs 18 per share or one ICICI share for every 15 shares of Anagram,” said Dharmesh Doshi, Oxford International Finance. “Over the last few years, ICICI has made a conscious attempt to shift from a very strongwholesale focus, both in respect of assets and liabilities to a more retail orientation. The proposed merger is another initiative towards this objective. Anagram’s retail infrastructure provides a platform to further ICICI’s thrust towards mobilisation of retail resources,” ICICI said.

The Anagram network, particularly in the western and northern sectors would complement the infrastructure already acquired from ITC Classic. The acquisition of Anagram’s retail assets will be a further step towards diversification of ICICI’s assets base, it claimed.