The Board of Directors of Aditya Birla Nuvo Ltd. (ABNL) has approved the proposed acquisition of a controlling stake in Future Group’s Pantaloons Format business post its demerger from Pantaloons Retail (India) Ltd. (PRIL).
Said Mr. Kumar Mangalam Birla, Chairman, ABNL: “The proposed acquisition is in line with our strategic intent to be on the top of the league and to create the largest integrated branded fashion player in the country through an extension into the value segment. This acquisition will catapult ABNL to the pole position in the branded fashion space in all the segments with a pan-India presence.”
“On completion of the acquisition, the two entities, ABNL’s Madura Fashion & Lifestyle and PRIL, will work closely as partners to derive operational synergies in terms of back-end, supply chain and many other important value drivers of the business. “We are delighted to have Mr. Kishore Biyani as our partner in the Pantaloons Format business. Furthermore, to ensure continuity, the current management team will continue to run the business,” added Mr. Birla.
With this acquisition, ABNL will have multiple brands, store formats and a complete range across all categories – casual wear, ethnic wear, formal wear, party wear and sports wear for men, women and kids.
Both ABNL and PRIL have a common shared vision of creating value for its multiple stakeholders. ABNL’s Madura Fashion & Lifestyle put in an impressive performance for 2011, with a revenue of Rs. 2,145 crores. Its leading brands, Louis Philippe, Van Heusen, Allen Solly, Peter England, People and The Collective, span a retail space of 1.6 million square feet across the country. Pantaloons Format business is spread over 2.05 million square feet. Their combined strength will be of great advantage for all the stakeholders.
Here is how the transaction will be executed:
PRIL will issue debentures to ABNL worth Rs. 800 crores on mutually agreed terms, convertible in the equity shares of the resulting entity, i.e., Pantaloons Format business.
PRIL will demerge its Pantaloons Format business through a court scheme of arrangement. It will transfer the net assets of its business, its apportioned debt of Rs. 800 crores and debentures of Rs. 800 crores to the resulting entity. After the demerger, the debentures will be converted into equity shares of the resulting entity.
ABNL will make an open offer of a minimum 26 per cent to the shareholders of the resulting entity. After the listing of the resulting entity and on conversion of debentures into equity, ABNL’s holding in the resulting entity post-open offer shall be a minimum of 50.01 per cent. The resulting entity will become a subsidiary of ABNL.
The proposed transaction is likely to be completed within 8 to 10 months, subject to the finalisation of the Scheme of Arrangement, due diligence and statutory and other requisite approvals.
Aditya Birla Nuvo is a $4 billion conglomerate. Over the years, it has made successful ventures into sunrise sectors like financial services (life insurance, asset management, NBFC, private equity, broking, wealth management and general insurance advisory), telecom, fashion and lifestyle and IT-ITeS. Its focus on manufacturing businesses has made it a leading player in agri-business, carbon black, insulators, rayon and textiles.
It is part of the Aditya Birla Group, a $35 billion Indian multinational operating in 36 countries across the globe with a workforce of 133,000 employees belonging to 42 nationalities and deriving more than 60 per cent of its revenue from its overseas operations.