JK Lakshmi Cement

not invested opinion other comments are welcome fact check it correct

1. Merger Overview:

• Udaipur Co. is merging with JK Lakshmi Cement. JK Lakshmi will issue 4 equity shares with a face value of ₹5 each for every 100 equity shares of ₹4 each held in Udaipur Co., excluding the shares already owned by JK Lakshmi.

2. Ownership and Shares:

• Udaipur Co. has 224 crore shares, 75% of which are owned by JK Lakshmi. JK Lakshmi Cement currently has 59 crore shares outstanding. The share prices are ₹34 for Udaipur Co. and ₹779 for JK Lakshmi.

3. Dilution Calculation:

• The merger leads to the issuance of 2.24 crore shares to Udaipur Co.'s minority shareholders, resulting in a 3.66% dilution for JK Lakshmi Cement’s shareholders.

4. Benefit to JK Lakshmi:

• JK Lakshmi benefits because it doesn’t issue new shares for the 75% of Udaipur Co. it already owns. This minimizes dilution and concentrates the benefits for JK Lakshmi’s existing shareholders.

5. Impact on Udaipur Co.'s Minority Shareholders:

• Udaipur Co.'s minority shareholders might perceive the deal as less favorable. Their stake in the merged entity is smaller, and they lose direct control over Udaipur Co., potentially feeling that their shares are undervalued.

The overall takeaway is that while the merger is beneficial for JK Lakshmi Cement, it may not be as favorable for Udaipur Co.’s minority shareholders due to the concentrated dilution and loss of control.