In a landmark decision, the National Company Law Appellate Tribunal (NCLAT) has sanctioned the long-pending merger between Equinox India and Embassy Group entities. This move comes after the Chandigarh bench of the National Company Law Tribunal (NCLT) had stalled the amalgamation process in May 2023, citing objections from the Income Tax Department.
The merger, initially approved by regulatory bodies and stakeholders, aims to establish a Pan-India real estate company by combining the strengths of IBREL in North India with Embassy’s operations in South India.
The merger faced a significant roadblock in May 2023 when the NCLT withheld approval based on concerns raised by the Income Tax Department over the valuation and share swap ratio. Despite regulatory clearances from the Competition Commission of India (CCI), bourses, the Registrar of Companies (RoC), and stakeholder approvals, the NCLT decided to intervene in the valuation process.
However, the NCLAT, in its 46-page judgment, criticised the NCLT for overstepping its jurisdiction. It emphasised that the valuation, conducted using the widely recognised Discounted Cash Flow (DCF) method, was performed by experts and did not warrant interference.
The appellate tribunal further noted that the Income Tax Department had left the final decision to the tribunal’s discretion and that Equinox India Development had undertaken to bear any tax liabilities arising from the amalgamation. The revision in the profit-sharing ratio of the Cornerstone Project also addressed discrepancies in cash flow, ensuring transparency and compliance.
With the appellate tribunal’s nod, IBREL and Embassy Group are now poised to create a Pan-India real estate giant. The amalgamation includes IBREL as the transferee company and NAM Estates and Embassy One Commercial Property Developments as transferor companies. The merger promises to harness the complementary strengths of both entities, expanding their footprint across North and South India.
NCLAT directed all companies involved to ensure compliance with statutory requirements following the merger. It also dismissed an appeal filed by Tejo Ratna Kongara, an objector to the scheme. This decision underscores the importance of respecting the commercial wisdom of shareholders, creditors, and boards of directors in corporate restructuring.
As of January 13, 2025, at 11:10 AM, the Shares of Equinox India Development trades at ₹131.86 per share with a decline of 0.23% from its previous day’s closing price.
The NCLAT’s decision to approve the merger between IBREL and Embassy Group marks a pivotal moment for India’s real estate sector. By resolving objections and upholding the expert-driven valuation process, the tribunal has paved the way for the creation of a unified, Pan-India real estate powerhouse, capable of leveraging synergies to deliver sustainable growth.
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Published on: Jan 13, 2025, 1:58 PM IST
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