Adani Enterprises board approves demerger of food and FMCG business

Adani Wilmar shares closed at Rs 348.80 per share, up 0.19 per cent on NSE, while Adani Enterprises closed at Rs 3,225.10 per share, up 1.76 per cent

The boards of directors of Adani Enterprises Limited (AEL), the flagship company of Adani group, and Adani Wilmar Limited (AWL), a food company, on Thursday approved the scheme of arrangement under which AEL will transfer its 43.94 per cent stake held in Adani Wilmar to its own shareholders. With this, the existing shareholders of AEL will hold shares directly in Adani Wilmar. Post-demerger, AEL shareholders will receive 251 shares of AWL for every 500 shares of AEL, or in that ratio.

In a notice to the stock exchange, AEL said it continues to incubate new businesses and create sustainable and long-term value for its stakeholders.

"Over the years, we have a track record of successfully incubating businesses across various sectors which are currently leading players in their respective sectors and delivering substantial returns to their shareholders. In line with above, the board of directors of AEL has approved the demerger of the food FMCG business of AEL to Adani Wilmar along with AEL’s strategic investment in Adani Commodities LLP. The food FMCG business has become self-sustained, performing well and poised for further growth under AWL. For AEL, this arrangement will not only unlock the value for shareholders but also allow focused strategy for sustainable growth in its incubating businesses," the notice said.

“This demerger is in line with AEL’s incubation strategy, which includes demerging of the business once it is self-sustained and properly established. In the past, AEL has demerged businesses, including Adani Green Energy, Adani Energy Solutions (Adani Transmission earlier), etc., once they became self-sustaining,” a group source said.

No cash consideration is payable under the proposed scheme.

The company also said that each of the varied businesses carried on by the demerged company either by itself or through its subsidiaries, or through associate companies, including food FMCG business, has significant potential for growth and profitability.

“The food FMCG business and other businesses of the demerged company are capable of attracting a different set of investors, strategic partners, lenders and other stakeholders,” AWL said in its filing. “There are also differences in the manner in which the food FMCG business and other businesses of the demerged company are required to be handled and managed,” the filing added.

The company also said that the segregation will increase focus of the management in the food FMCG business and other businesses, facilitating the management to efficiently exploit opportunities for each of the said businesses. It will also provide scope for independent collaboration and expansion.

AWL share closed at Rs 348.80 per share, up 0.19 per cent, on NSE, while AEL share closed at Rs 3,225.10 per share, up 1.76 per cent.