Apparel, Fashion, Retail

ABFRL Board Approves Demerger Of Madura Business Into A Separate Listed Entity

Following the announcement on April 1, 2024, the Board of Directors of ABFRL convened and approved the proposal for the vertical demerger of Madura fashion and lifestyle business from ABFRL into a newly incorporated entity named Aditya Birla Lifestyle Brands Ltd. (ABLBL). Upon completion, ABLBL will be listed separately, marking a significant strategic move aimed at accelerating growth and value creation for the shareholders.

The demerger is anticipated to unlock substantial value for ABFRL shareholders, providing each listed entity with distinct capital structures, independent growth trajectories and enhanced value creation opportunities.

The demerger process will be implemented through an NCLT scheme of arrangement, ensuring that all ABFRL shareholders receive identical shareholdings in both companies upon completion.

Post-demerger, the two listed entities will be structured as follows:

Aditya Birla Lifestyle Brands Ltd. (ABLBL) will encompass:

  • Lifestyle brands including Louis Phillippe, Van Heusen, Allen Solly, and Peter England.
  • Casual wear brands such as American Eagle and Forever 21.
  • Sportswear brand Reebok.
  • Innerwear business under the Van Heusen brand.

Aditya Birla Fashion and Retail Ltd. (ABFRL) will comprise:

  • Value retail segment, featuring Pantaloons and Style Up.
  • An extensive ethnic portfolio catering to various occasions, price points, and consumer segments, inclusive of designer wear partnerships and recently acquired TCNS brands.
  • Luxury segment, which includes The Collective, Galleries Lafayette and select luxury brands.
  • Digital brands, including TMRW, a leading portfolio of digital-first fashion brands.

Upon completion of the demerger, ABFRL shareholders will receive one share of ABLBL for every one share held in ABFRL, in addition to their existing ABFRL shareholding. Assets and liabilities will be appropriately divided between the two companies, adhering to regulatory provisions.

Regarding debt allocation, approximately Rs 1000 crore of the estimated Rs 3000 crore ABFRL borrowing as of March 31, 2024, will be transferred to ABLBL, with the remaining balance staying with ABFRL.

Within 12 months post-demerger completion, ABFRL aims to raise approximately Rs 2,500 crore in equity capital to fortify its balance sheet and fuel the growth of its remaining businesses, with full support from the promoter group.

The proposed demerger is subject to requisite approvals from shareholders, creditors, regulators and other customary authorities.

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