Search:



The Web

Rediff








 Latest Business news on mobile: sms BIZ to 7333

Home > Business > Business Headline > Report


What the Ambani peace plan is like

BS Corporate Bureau in New Delhi | June 17, 2005 09:09 IST
Last Updated: June 17, 2005 09:19 IST


The Reliance settlement between the Ambani brothers, Mukesh and Anil, will see the creation of a new holding company that will own the controlling shares of Reliance Energy, Reliance Infocomm and Reliance Capital.

These are the businesses that are slated to go to Anil following the division of the group, scheduled to be announced early next month.

According to usually reliable sources, this new holding company will have the same shareholding as the existing Reliance Industries, so that no minority shareholder loses out in the split of the group.

This structure achieves two other objectives. First, there are no tax implications. And second, under Sebi rules the new holding company can get automatically listed on the stock exchange, since it has the same shareholding structure as the already listed Reliance Industries.

Ambani vs Ambani: Final solution in sight

The agreement is said to be that Mukesh and Anil will then buy out each other's shares in the two holding companies, with synchronised deals effected on stock exchange screens in order to avoid capital gains tax.

This will involve the holdings of group investment firms but would avoid having to untangle their complicated internal structures. Controlling ownership will then be aligned with management control in RIL as well as in the new holding firm.

Since Reliance Industries, which goes to Mukesh, will be valued at more than the new holding company, Mukesh will in effect have to pay Anil cash as part of the mutual transactions. The amount involved is not known, but informed sources have said it is substantial.

It is also not clear whether the two brothers have agreed on prior valuations for unlisted firms like Reliance Infocomm, which will form the basis for share swaps after the new holding company is listed, with compensating payments to be made in case the stock market price of the new company differs from what has been agreed on.

Even these payments, it is said, are tax-free if made as a gift to a relative.

Easing the split
  • The holding company will own the controlling shares of Reliance Energy, Reliance Infocomm and Reliance Capital. It will have the same shareholding as Reliance Industries
  • Mukesh and Anil Ambani will buy out each other's shares in the two holding companies
  • Controlling ownership will be aligned with management control in Reliance Industries as well as in the new holding firm


7333: The Latest News on Your Mobile!

Powered by

Share your comments


 What do you think about the story?




Read what others have to say:


Number of User Comments: 2




Sub: lets get the show rolling!!!

people are getting bored now, with the streching of the fued by both brothers. settle out everything fast, split the cake whichever way you want, ...


Posted by Pankaj





Sub: Ambani Brothers...A Trap

Dear Readers Ambani brothers are making fool by fighting on the property issue.They want sympathy from Public,media and from the market.They are playing a game ...


Posted by Mohit




Disclaimer




Article Tools
Email this article
Top emailed links
Print this article
Write us a letter
Discuss this article









Copyright © 2005 rediff.com India Limited. All Rights Reserved.