In a bid to capitalise on its large market presence in the branded fashion space in India, Aditya Birla Nuvo (ABNL) on Sunday announced consolidation of its branded apparels businesses under its listed subsidiary - Pantaloons Fashion & Retail (PFRL).
The Boards of Directors of ABNL, PFRL and Madura Garments Lifestyle Retail Company (MGLRCL), a subsidiary of ABNL, at their respective meetings held today, have approved the consolidation of branded apparels businesses under PFRL, through a composite scheme of arrangement (Scheme).
To reflect the enhanced scope of the operations post consolidation, the Board of PFRL has approved PFRL to be renamed as 'Aditya Birla Fashion & Retail Limited' (ABFRL).
Kumar Mangalam Birla, Chairman, Aditya Birla Group said, '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 no. 1 branded menswear and womenswear players together.'
'The consolidation will unlock value for the shareholders by giving them an opportunity to participate in the promising fashion space directly through ABFRL', added Birla.
The businesses that will be demerged from the respective companies into PFRL are Madura Fashion, a branded apparel retailing division of ABNL, and Madura Lifestyle, a luxury branded apparel retailing division of MGLRCL.
The boards have approved the swap ratio recommended by the independent valuers. Shareholders of ABNL will get 26 new equity shares of PFRL for every 5 equity shares held in ABNL pursuant to the demerger of Madura Fashion. Meanwhile, shareholders of MGLRCL will get 7 new equity shares of PFRL for every 500 equity shares held in MGLRCL pursuant to the demerger of Madura Lifestyle. Preference shareholder of MGLRCL will get 1 new equity share of PFRL.
On the completion of the transaction and issuance of new shares, the existing base of 92.8 million equity shares of PFRL will go up to 772.8 million equity shares. The new shares will be issued directly to the respective shareholders of the transferor companies.
An existing shareholder holding 100 equity shares in ABNL will continue to hold 100 equity shares of ABNL and in addition, will get 520 equity shares of PFRL.
Pranab Barua, Business Director, Apparel & Retail business, said, '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.'
The apparels category is the largest contributor to the organised retailing market in India which is expected to grow at a robust CAGR of 18% over next few years. Having a combined turnover and EBITDA of Rs 52.90 billion and Rs 4.93 billion respectively for twelve months ended Dec. 31, 2014, ABFRL will have the widest retail network in India in the fashion space with 1,869 exclusive stores pan India across 4.8 million square feet, as on Mar. 31, 2015, the company said.
The consolidation will also enable tapping of operational synergies on various fronts such as sourcing, real estate and technology platforms.
The transaction is subject to the necessary statutory and regulatory approvals including approvals of the respective High Courts, the Stock Exchanges, SEBI, the respective Shareholders and lenders / creditors of each of the companies. The appointed date of the Scheme will be Apr. 1, 2015. The transaction is expected to be consummated in the next 6 to 9 months.
Aditya Birla Nuvo's shares are trading at Rs 1,801.90, up Rs 231.6, or 14.75% at the Bombay Stock Exchange (BSE). Meanwhile, shares of Pantaloons Fashion and Retail are trading at Rs 136.60, up Rs 22.70, or 19.93% on Monday at 1:27 p.m.
