Indiabulls Real Estate surges 7% as Embassy Group signs merger agreement

Jitendra Virwani along with other promoter entities of NAM Estates will become the new promoters of IBREL upon completion of merger

Indiabulls Real Estate shares soared as much as 7.2 per cent to quote at Rs 79 apiece on the BSE on Wednesday after Bengaluru-based realty firm Embassy Group on Tuesday signed an agreement to merge its various housing and commercial projects with the Indiabulls Group company and take control of the merged entity.

Jitendra Virwani along with other promoter entities of NAM Estates (Embassy Promoters) will become the new promoters of IBREL upon completion of merger and Sameer Gehlaut, along with existing IBREL promoter group entities, shall initiate the process of reclassification as required. Embassy Group already has around 14 per cent stake in Mumbai-based IBREL and the same will increase to 45 per cent after the merger of assets of these two companies.

"The merger shall provide diversification to IBREL shareholders towards a balanced mix of residential and commercial development with visibility on near term liquidity through sold receivables in excess of Rs. 4,220 crores for the combined entity," the company said in a statement. READ HERE

Under the terms of the agreement, the IBREL's shares are being valued at Rs 92.5 per share, a 25.7 per cent premium to Tuesday's closing price. NAM shareholders will get 6.619 shares of IBREL for every 10 shares of NAM whilst NAM Opco shareholders will get 5.406 shares of IBREL for every 10 shares in NAM Opco.

The proposed merger will be achieved through a cashless scheme of amalgamation.

"Subsequent to the merger being effected, the resultant listed entity shall be owned 44.9 per cent by Embassy Group, 26.2 per cent by the existing public & institutional shareholders, 9.8 per cent by existing IBREL Promoter Group and 19.1 per cent by BREP & other Embassy institutional investors," the filing said.

The merger is expected to be completed by the second quarter of 2021-22, the company said in its regulatory filing.

At 9:41 am, the stock was quoting at Rs 74.65 per share, up 1.5 per cent, on the BSE. A combined 5.6 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. In comparison, the S&P  BSE Sensex was at 38,725 level, up 0.5 per cent. 

Other group stocks were trading higher too. Indiabulls Ventures and its partly paid shares gained 3 per cent each in the morning deals, Indiabulls Housing Finance added 1.6 per cent, and Indiabulls Intergrated Services was up 0.3 per cent.

In June last year, the promoters of IBREL sold 14 per cent stake through open market transactions to Embassy Group for Rs 950 crore, as part of their strategy to focus on financial services and exit from realty business. Meanwhile, IBREL had in January this year announced its proposal of the merger of certain ongoing, completed and planned residential and commercial projects of Embassy Property Developments with itself.