UPL share price tanks 14% following the company's reorganisation plan; finer details and what analysts said

The agrochemical firm on Friday said it will integrate Indian and international crop protection businesses into a single entity as it seeks to create a focused pure-play platform for growth of this business globally while simplifying group structure.

In a regulatory filing, UPL informed that its board approved a composite scheme of arrangement amongst itself, UPL Sustainable Agri Solutions Ltd (UPL SAS), UPL Global Sustainable Agri Solutions Ltd (UPL 2), UPL Crop Protection Holdings Ltd (UPL Cayman) and their respective shareholders.

UPL reorganisation plan: Key details

In its press release on Friday post-market hours, UPL said that the company's board has approved a group reorganisation plan through a composite scheme of arrangement (“Scheme”) with the objective of unlocking value for its shareholders by creating an independent and focused crop protection platform.

The reorganisation will consolidate UPL’s India and international crop protection businesses through the Scheme, involving UPL and its subsidiaries, viz.:

Strategic Rationale & Benefits

1. Unlocking Shareholder Value: The company said that the scheme will create two listed entities: i) UPL, an existing listed company, as a diversified agriculture and speciality chemicals platform, and ii) UPL Global as a dedicated crop protection platform.

This will enable clearer value discovery by providing flexibility to the investors to select investments which best suit their investment strategies and risk profile.

2. Simplification of group structure: The scheme simplifies the group structure by consolidating the crop protection business into a single entity, thus enhancing synergies across research, manufacturing and market access, driving greater efficiency.
3. Creation of Integrated and Pure-Play Crop Protection Platform: The scheme consolidates UPL’s India and international crop protection businesses under UPL Global, creating a dedicated pure-play crop protection platform.

The integrated business will benefit from UPL’s strong manufacturing base, advanced research capabilities, a robust global product portfolio and independent management.

Approvals and Timelines

The transaction is expected to be completed within 12–15 months, subject to the timely receipt of regulatory and other required approvals.

What management said

Jai Shroff, Chairman & Group CEO of UPL, said, “This strategic reorganisation is an important milestone in UPL’s long-term transformation journey. The reorganised UPL structure strengthens our ability to build and scale diversified businesses across agriculture and speciality chemicals, while also driving the incubation of next-generation sustainable ventures."

"By unifying our India and international crop protection businesses under UPL Global, we are creating a future-ready platform with the focus, agility and innovation needed to lead in a rapidly evolving market. This move sharpens strategic focus, aligns stakeholder interests and positions both UPL and UPL Global for disciplined, value-accretive growth in the years ahead," Shroff added.

Mike Frank, who has successfully led UPL Corp’s global crop protection business through a period of portfolio expansion and operational strengthening, will serve as the CEO of UPL Global.

Mike Frank, CEO of UPL Global, added, “Bringing our crop protection businesses under one platform creates the world’s second largest listed pure-play crop protection platform. With a presence in more than 140 countries, this unified platform will enable us to deliver innovations to farmers faster and more efficiently to gain greater market share. This will position us to strengthen operational synergies and drive long-term value for our stakeholders."

What analysts say

According to media reports, analysts said the restructuring entails the merger of UPL SAS and UPL Corp into a single listed entity to be named UPL Global, while UPL Limited will continue as the holding company for the formulation business, R&D, SUPERFORM and Advanta.

The demerger is aimed at driving synergies and unlocking value. Some analysts also highlighted that the transaction is cash- and tax-neutral, protects minority shareholder interests, does not alter the capital structure, and is unlikely to have any material impact on the company’s current leverage position.

Meanwhile, Investec remains positive following the board’s approval to carve out its crop protection business (UPL Corp and SAS) into a separately listed entity, UPL Global.

The speciality chemicals business, Superform, will remain within the holding company, which will retain flexibility to raise capital in the future through an IPO or private equity.

Post restructuring, a consortium of private equity investors — Abu Dhabi Investment Authority (ADIA), TPG and Brookfield Asset Management — will hold a 17% stake in UPL Global and less than 1% in the holding company.

According to management, the move is expected to simplify the organisational structure, unlock shareholder value, and sharpen focus on deleveraging, although Investec sees limited immediate upside to overall valuation compared with the current structure.