ABRFL board approves demerger of Madura to Aditya Birla Lifestyle Brands
New Delhi: The board of directors of Aditya Birla Fashion and Retail Ltd (ABFRL) has approved the demerger of Madura Fashion & Lifestyle (MFL) business from ABFRL into a newly incorporated company named Aditya Birla Lifestyle Brands Ltd (ABLBL), which will be listed separately once the demerger is completed.
ABLBL will house lifestyle brands such as Louis Phillippe, Van Heusen, Allen Solly & Peter England; casual wear brands such as American Eagle & Forever 21; sportswear brand Reebok; and Van Heusen innerwear.
ABFRL will house platforms such as Pantaloons & Style Up; an ethnic wear portfolio including designer-wear partnerships and the recently acquired portfolio of TCNS brands; luxury offerings such as The Collective, Galleries Lafayette; and a portfolio of digital brands under TMRW.
The move will accelerate growth and value-creation through two listed entities with clear structure and a sharp capital-allocation strategy, the company said.
Within 12 months of the demerger, ABFRL plans to raise ₹2,500 crore in equity to strengthen its balance sheet and fund the growth of the remaining businesses. The company’s promoter group will fully support the proposed equity raise, the company said in a statement on Friday.
“Upon completion of the demerger, as per the share entitlement ratio approved by the board and recommended by the independent valuer, the shareholders of ABFRL will get one share of ABLBL for every one share in ABFRL, in addition to their existing shareholding in ABFRL. The business assets and liabilities will be split between the two companies in accordance with the prescribed regulatory provisions,” the company said.
In line with this, ABFRL’s overall borrowing, which is estimated to be ₹3000 crore as of 31 March, will be split between the two companies, with about ₹1,000 crore of debt going to ABLBL.
The demerger will be implemented through an NCLT scheme of arrangement and once complete, all shareholders of ABFRL will have identical stakes in both the companies. The company had first announced plans of a demerger on 1 April.
PWC LLP is the statutory auditor of the company and AZB is the legal counsel for the transaction. Bansi S Mehta Valuers LLP were the independent valuers to the transaction and INGA Ventures Pvt Ltd provided the fairness opinion.
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Published: 19 Apr 2024, 06:33 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.