Grasim-AB Capital Demerger

How to Calculate Your Purchase Price - Grasim-AB Capital Demerger

Grasim Industries recently dissolved Aditya Birla Capital Limited through allotment of shares to existing shareholders.

In April 2011, Aditya Birla was approved to merge with Nuvo Grasim Industries. Following the merger, they closed down financial services businesses including mutual funds, NBFCs, life insurance and payment banks under Aditya Birla Capital. We wrote about this deal in our premium newsletter: ABNVO-Grasim Merger does an interesting business.

In June this year, the family investment arm of Wipro chairman and billionaire Azim Premji invested Rs 70,000 crore to acquire a 2.2 percent stake in Premji Investment Company. In this agreement, the value of Aditya Birla capital is Rs 32,000 crore.

The de-merger was completed in July 2017 and on 1 September Aditya Birla Financial Services is listed on the exchanges.

But if you bought Grasim shares before the demerger, how do you divide your purchase price between Grasim shares and the AB Capital shares you now have? We've written a detailed and free article on this topic: How to calculate your purchase price in case of demerger?

Aditya Birla today released the calculation for the cost of acquiring financial services for the shareholders holding the share on the Grasim record date.

Assuming you bought 100 shares of Grasim in 1300, how should the price of acquisition of Grasim and Aditya Birla financial services treat you?

The calculation is based on the assumption that you have acquired Grasim stock at 1,300.00.

Use Excel Sheet (link) to get accurate calculation if your price is different.

Disclosure: We grabbed shares of Grasim and then exited Grasim and AB Capital at a price of around Rs.500. 1192 and Rs. 204 respectively. (It was also mentioned in the post) worth Rs 45,000 crore. AB seemed a bit rich for Capital and we decided to book a 15% return in just two months. But please keep in mind that this is not a recommendation and the price of the dimmer is for your information. We hope that a lot of people want to know in the next tax season, so that they can calculate the tax effect.

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