- Move to accelerate growth and value creation through two listed entities with clear structure & sharp capital allocation strategy
- ABFRL plans to raise ~ Rs. 2500 Cr equity capital within 12 months of demerger with promoter participation
Pursuant to the announcement on 01 April 2024, The Board of Directors of ABFRL, at its meeting today, has approved the proposal of vertical demerger of Madura Fashion & Lifestyle business (MFL Business) from ABFRL into a newly incorporated company named as Aditya Birla Lifestyle Brands Ltd. (ABLBL), which will be listed separately on completion of the demerger.
The demerger is expected to unlock significant value for the shareholders of ABFRL as each of the listed entities will have their own distinct capital structures, independent growth trajectories & value creation opportunities.
The demerger will be implemented through an NCLT scheme of arrangement and upon its completion, all shareholders of ABFRL will have identical shareholdings in both the companies.
Post demerger, the two listed companies will be as follows:
Aditya Birla Lifestyle Brands Ltd. (ABLBL)
Will house the Business consisting of –
- Lifestyle brands – Louis Phillippe, Van Heusen, Allen Solly & Peter England
- Casual wear brands – viz. American Eagle & Forever 21
- Sportswear brand – Reebok
- Innerwear business under Van Heusen brand
Aditya Birla Fashion & Retail Ltd. (ABFRL)
Remaining businesses in ABFRL will be a portfolio of multiple growth platforms –
- Value Retail – Value & masstige fashion retail play under Pantaloons & Style Up
- Ethnic Portfolio – One of India’s most comprehensive ethnic wear portfolio covering multiple occasions, price points and consumer segments, including designer wear partnerships and recently acquired portfolio of TCNS brands
- Luxury – A fast-growing bridge to luxury & luxury platform of The Collective, Galleries Lafayette & select luxury brands
- Digital brands – TMRW – a leading portfolio of digital first fashion brands
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. In line with this, the overall ABFRL borrowing, which is estimated to be ~ Rs. 3000 Cr. as of 31st March 2024, will be split between the two companies. The estimated debt to be transferred to ABLBL will be ~Rs. 1000 Cr., and the balance will continue to stay with ABFRL.
Within 12 months after the completion of the demerger, ABFRL plans to raise ~ Rs. 2,500 Cr. equity capital 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 proposed demerger will be subjected to necessary approvals from shareholders, creditors, regulators, along with other customary approvals.
PWC LLP are the statutory auditors of the Company and AZB are the legal counsels for the transaction. Bansi S Mehta Valuers LLP were the independent valuers to the transaction and INGA Ventures Pvt. Ltd. provided the fairness opinion.
