Excel Crop Care Limited (“Excel”), a leading manufacturer of crop protection chemicals in India, announced its merger with Sumitomo Chemical India Private Limited (“Sumitomo Chemical India”), a wholly owned subsidiary of the USD 20.6 bn chemical giant, Sumitomo Chemical Company, Limited, Japan (“SCC Japan”). Given the similarity in businesses and the high degree of operational complementarily, Excel and Sumitomo Chemical India have made a strategic decision to merge Excel with Sumitomo Chemical India. The merger is expected to usher in long-term benefits by creating an enterprise of scale with comprehensive product offerings.
Excel’s shareholders other than Sumitomo Chemical India will receive 51 (fifty one) fully paid-up equity shares of Sumitomo Chemical India of face value of INR 10 each for every 2 (two) fully paid-up equity shares of face value of INR 5 each held in Excel as on the record date to be fixed in due course by the Board of Excel in consultation with the Board of Sumitomo Chemical India. The equity shares of Excel held by Sumitomo Chemical India as on the record date will get canceled. Post-merger, Excel will get dissolved without being wound up and subsequently the equity shares of the Sumitomo Chemical India will get listed on both BSE Limited and National Stock Exchange of India Limited. SCC Japan and Sumitomo Chemical India own 44.98% and 19.98% in Excel respectively.
The merger would take place through a scheme of amalgamation which would be subject to the approval of the National Company Law Tribunal at Mumbai and other relevant regulatory authorities. KPMG in India acted as project advisor to Excel and Sumitomo Chemical India on tax and regulatory matters arising from the proposed consolidation. DSK Legal acted as a legal advisor to Sumitomo Chemical India. Kotak Investment Banking acted as a financial advisor to Excel. Kanga & Co. acted as a legal advisor to Excel. Deloitte Haskins & Sells and Desai Haribhakti & Co. acted as the joint valuation advisors for both Excel and Sumitomo Chemical India and Kotak Investment Banking issued a fairness opinion to the Board of Directors of Excel.
Commenting on the merger, Excel’s representative mentioned “The merger is an optimal initiative to harness the combined strengths of Excel and Sumitomo Chemical India. It will add capabilities to produce and sell specialty chemicals while benefitting both in India and globally from being a direct subsidiary of SCC Japan. Their culture, philosophy and long term 2 strategic planning will help the business in achieving higher efficiencies and help expand the scope of operations. We also expect synergies at multiple levels from the merger especially in R&D operations as it opens up possibilities to create novel combination products by combining SCC Japan’s specialty products and our generic products. The merger has a strong business rationale because of Excel’s ability to economically manufacture active ingredients, its strong distribution network and long standing reputation with farmers, combined with Sumitomo Chemical India’s proven ‘go-to-market’ strategy and strong brand-connect with farmers. This can bring ample amount of additional sales through cross selling. Together we can serve the farmers both in India and globally through the complete value chain. SCC Japan has positive outlook for India and has made several investments in the last two decades for using India as a business location to better tap the Indian and the global markets. The merger is a strong indication that SCC Japan is committed to further expanding its activities in India.”
The Board of Directors of Excel Crop Care Limited ("the Company" or "Transferor Company") at its meeting held on 1st August, 2018 has considered and approved, the scheme of amalgamation of Excel Crop Care Limited with Sumitomo Chemical India Private Limited ("Transferee Company") and their respective shareholders ("Scheme") under the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with relevant rules framed there under.
The amalgamation of the Transferor Company with the Transferee Company ("Amalgamation") shall be subject to the approval/ sanction of the Scheme by the National Company Law Tribunal ("NCLT") having jurisdiction over the Transferor and Transferee Company, approvals of the stock exchanges, Securities and Exchange Board of India, the respective shareholders and any other stakeholders (if required) of the Transferor and the Transferee Company and such other regulatory authority, as may be necessary.