Mumbai : In a major consolidation exercise, Aditya Birla Group merged its apparel businesses into a Rs 5,290 crore entity named Aditya Birla Fashion and Retail (ABFRL), which will be the largest pure-play fashion lifestyle company in the country.
Under the scheme of arrangement approved by the boards of respective companies, the apparel businesses of group holding company Aditya Birla Nuvo (ABNL) and of another group firm Madura Garments Lifestyle Retail Company Ltd (MGLRCL) would be demerged into listed firm Pantaloons Fashion & Retail Ltd (PFRL).
“We are combining businesses of Madura Garments and Pantaloons from Aditya Birla Nuvo through a process of a vertical demerger and creating a listed apparel retail company. The new company will be the largest not only in the listed but also in the non-listed space,” Group Chairman Kumar Mangalam Birla told reporters. The new entity will have a retail network of 1,869 exclusive stores.
According to analysts, the combined entity will have a revenue of over Rs 6,000 crore.
Birla further said that the Group has created a structure where shareholders of ABNL will get a direct shareholding in the apparel business through ABFRL. According to the swap-ratio recommended by two independent valuers — Price Waterhouse and Co LLP and Bansi Mehta and Co — 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.
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. The transaction, which is subject to corporate and regulatory approvals, is likely to be completed in next 6 to 9 months.
Commenting on the merger, J M Financial, who gave independent fairness opinion to PFRL, said, “This creates the leading branded fashion and retail business in the country. “The size of 5 million sq ft and 1,800 plus stores along with the expansion and synergies would make this an extremely attractive investment opportunity for domestic and foreign investors.”
