Aditya Birla Group consolidates apparel businesses into one entity through an all-share deal

By: | Updated: May 4, 2015 8:14 AM

Apparel businesses of group holding company Aditya Birla Nuvo and of another group firm Madura Garments Lifestyle Retail Ltd would be demerged into listed firm Pantaloons Fashion & Retail Ltd (PFRL).

aditya birla groupAditya Birla Group today announced merger of all its branded apparel businesses into one entity, Aditya Birla Fashion and Retail Ltd, through an all-share deal. (Reuters)

In a major restructuring exercise, Aditya Birla Group today announced merger of all its branded apparel businesses into one entity, Aditya Birla Fashion and Retail Ltd, through an all-share deal.

The new entity will have a combined turnover of Rs 5,290 crore and a retail network of 1,869 exclusive stores, becoming the largest pure play fashion company in the country.

Under the scheme of arrangement, approved today by the boards of respective companies, the apparel businesses of group holding company Aditya Birla Nuvo and of another group firm Madura Garments Lifestyle Retail Ltd would be demerged into listed firm Pantaloons Fashion & Retail Ltd (PFRL).

Pantaloons Fashion & Retail Ltd Apparel businesses of group holding company Aditya Birla Nuvo and of another group firm Madura Garments Lifestyle Retail Ltd would be demerged into listed firm Pantaloons Fashion & Retail Ltd (PFRL).

Subsequently, PFRL would be renamed as Aditya Birla Fashion & Retail Ltd (ABFR), the group said, while adding that the exercise would help it capitalise on its large market presence in the branded fashion space in India.

“This consolidation will create India’s largest pure play fashion & lifestyle company with a strong bouquet of leading fashion brands and retail formats. This move brings India’s number one branded menswear and womenswear players together,” Group Chairman Kumar Mangalam Birla said.

The consolidation will unlock value for the shareholders by giving them an opportunity to participate in the promising fashion space directly through ABFR, he added.

The businesses that will be demerged into PFRL are Madura Fashion (branded apparel retailing division of ABN) and Madura Lifestyle (luxury branded apparel retailing division of MGLRC).

Aditya Birla Nuvo shareholders will get 26 new equity shares of PFR for every five equity shares held in ABN pursuant to the demerger of Madura Fashion.

Also, shareholders of MGLRC will get seven new equity shares of PFR for every 500 equity shares held in MGLRC pursuant to the demerger of Madura Lifestyle, while preference shareholder of MGLRC will get one new equity share of PFR.

On the completion of the transaction and issuance of new shares, the existing base of 9.28 crore equity shares of PFR will go up to 77.28 crore equity shares, the statement said.

The new shares will be issued directly to the respective shareholders of the transferor companies.
An existing shareholder holding 100 equity shares in ABN will get 520 additional equity shares of PFR.

“This move to bring all the branded apparels businesses under one roof will accelerate the growth of these businesses and help exploit emerging opportunities presented by the rapidly growing Indian apparel market,” Pranab Barua, Business Director, Apparel & Retail business said.

The apparels category is the largest contributor to the organised retailing market in India, which is expected to grow at a CAGR of 18 per cent over next few years.

The transaction is subject to the necessary statutory and regulatory approvals including approvals of the respective High Courts, stock exchanges, SEBI, respective shareholders and lenders/creditors of each of the companies.

While the appointed date of the scheme will be April 1, 2015, the transaction is expected to be consummated in the next 6-9 months.

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