Indiabulls Real Estate, Embassy Group finalize merger terms, share swap

Indiabulls Real Estate Ltd. (IBREL) and two subsidiaries of Embassy Group on Tuesday announced that they have entered into a definitive merger agreement to create one of India's leading real estate development platforms. Combined IBREL to be renamed Embassy Developments Ltd and to be co-headquartered in Mumbai and Bengaluru.

Indiabulls in its press release said, Indiabulls Real Estate has entered into definitive merger documentation with NAM Estates Pvt Ltd ('NAM') and Embassy One Commercial Property Developments Private Limited ('NAM Opco'), both subsidiaries of the Embassy Group to amalgamate ongoing completed & planned residential and commercial projects of NAM and NAM Opco ('Embassy Assets').

The release added, Mr Jitendra Virwani along with other promoter entities of NAM (Embassy Promoters) will become the new promoters of IBREL upon completion of the merger and Mr Sameer Gehlaut along with existing IBREL promoter group entities shall initiate the process of reclassification as required.

The combined IBREL entity shall become one of India's leading real estate development platforms, with 80.8 million square feet of launched and planned development potential. The combined entity shall benefit from a complementary pan-India presence across key markets including a significant presence in the commercial and residential market of Bengaluru.

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 over Rs 4,220 crores for the combined entity.

According to the terms approved by boards of both the merging entities, Indiabulls Real Estate shares are valued at Rs. 92.5 per share, a 25.7% premium to Tuesday's closing price.

Certain entities controlled by The Blackstone Group Inc. (collectively, 'BREP') have submitted a non-binding LOI for participation in the proposed merger.

As part of the combination, certain private equity shareholders of Indiabulls Properties Private Limited, which owns the Sky / Sky Forest residential assets, shall swap their shares to NAM Opco and will eventually merge into IBREL under a National Company Law Tribunal ('NCLT') approved Scheme of Arrangement.

According to the approved terms, 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. Post Merger Shareholding pattern

1) Embassy Group: 44.9 per cent

2) Existing Public & Institutional Shareholders: 26.2 per cent

3) IBREL Promoter Group: 9.8%

4) BREP and other Embassy institutional investors: 19.1 per cent

The merger and reclassification of the promoter shall be subject to the approval of respective creditors and shareholders and applicable regulatory authorities, including but not limited to CCI, stock exchanges, SEBI, NCLT(s) and completion of other agreements integral to the merger. The merger is expected to be completed by September 2021, i.e. Q2FY2022.