Indiabulls Real Estate tanks 20% as Nam Estates-Embassy One merger faces delays

Shares of Indiabulls Real Estate plunged nearly 20% to Rs 55.6 in Tuesday's trade on BSE after the company informed the bourses that the merger of NAM Estates and Embassy One has been withheld by the National Company Law Tribunal (NCLT), Chandigarh Bench.

"Indiabulls Real Estate (IBREL) regrets to inform its shareholders and the public that the sanction to the merger of NAM Estates Private (NAM Estates) and Embassy One Commercial Property Developments (Embassy One) into IBREL has been withheld by the Hon’ble National Company Law Tribunal (NCLT), Chandigarh Bench," Indiabulls said in an exchange filing.

"It is pertinent to note that the merger already stands sanctioned by the Hon’ble NCLT, Bengaluru Bench, which has jurisdiction over NAM Estates and Embassy One, on April 22nd 2022. However, the Hon’ble NCLT, Chandigarh Bench, which has jurisdiction over IBREL, had earlier raised certain concerns based on the objections cited by the Income Tax department to the merger," Indiabulls added.

Indiabulls further stated that "IBREL strongly believes that these objections and concerns were unfounded, unjustified and do not impact the merger in a significant manner and had accordingly addressed the same before the NCLT."

The company will await the detailed order to further evaluate the next steps and shall explore all options, including filing an appeal against the order of the NCLT, Chandigarh Bench, before the Hon’ble National Company Law Appellate Tribunal at the earliest, it said.

"It is pertinent to note that the merger has already received overwhelming support from 99.9987% of its shareholders who voted on the same and has also received approval from other regulators. IBREL’s board shall be meeting over the next day to chalk out its plan and strategy to move forward and shall communicate the same to all its stakeholders, the firm said.

At 2.33 pm, the stock was trading 18.7% lower at Rs 56.25 on BSE. On a year-to-date, the stock has declined 33%.

Embassy Group Chairman, Jitu Virwani, expressed his disappointment at the decision and said, “We have provided all the necessary details and clarifications sought by the Hon’ble NCLT regarding the details of NAM Estates and Embassy One and have also meticulously addressed the objections cited by the Income Tax department, including giving an undertaking that any past tax issues will be borne by Embassy Group and not by the public shareholders of IBREL.

"However, the Hon’ble NCLT has taken an extreme step of not approving the merger. This development is specially surprising given that the merger already stands sanctioned by the Hon’ble NCLT, Bengaluru Bench, which has jurisdiction over NAM Estates and Embassy One, as far back as April 2022, and that other regulators such as CCI, BSE, NSE, Regional Director and Official Liquidator have also approved the Scheme," he added.