Birla’s Madura-Pantaloons merger creates Rs 12k-cr giant

MUMBAI: Kumar Mangalam Birla-led Aditya Birla Group has decided to merge two of its arms — the Aditya Birla Nuvo-owned fashion retailing business with Pantaloons Fashion & Retail — to create a Rs 12,000-crore (nearly $2-billion) branded apparel behemoth. To be called Aditya Birla Fashion & Retail (ABFRL), it would be the largest not only among listed branded apparel retail companies but also in the non-listed space.
Under the scheme of arrangement, approved on Sunday by the boards of the respective companies, Madura Fashion, the branded apparel retailing division, and Madura Lifestyle, the luxury branded apparel retailing of Aditya Birla Nuvo, will be demerged into its listed subsidiary — Pantaloons Fashions and Retail (PFRL), which will be renamed ABFRL.
“This consolidation will create India’s largest pure-play fashion and lifestyle company with a strong bucket of leading fashion brands and retail formats. This move brings India’s number one branded menswear and womenswear players together,” said Aditya Birla Group chairman Kumar Mangalam Birla.
Post restructuring, the new entity ABFRL will have 1,869 stores across India with revenues of Rs 5,290 crore and debt of Rs 1,775 crore (as debt of around Rs 475 crore will be passed on from Madura to Pantaloons Fashion).
“The idea is to unlock value for our shareholders in both Aditya Birla Nuvo and for Pantaloons Fashion. Investors of AB Nuvo have been asking for a de-merger for a long time,” said Birla.

Aditya Birla Group will directly hold 51.1% stake in the new entity and another 9.6% stake through ABNL, taking total holding in the merged entity beyond 60%, while the public will hold a little less than 40% stake.
Future Group founder Kishore Biyani, who holds 17% stake in Pantaloons, will see his stake falling below 5% post restructuring in the merged entity. “It’s a very good move and retail consolidation is the way forward. It will bring in efficiencies and reduce cost of operations,” said Biyani, who sold majority stake in Pantaloons to Birla in 2012.