Aditya Birla Fashion and Retail Limited (ABFRL) declared a merger with TCNS Clothing.
The shares of both companies fell on Monday. TCNS shares tanked 20 percent, and Aditya Birla Fashion shares fell 5 percent.
The Economic Times reported that Aditya Birla Fashion and Retail Limited will raise rupees 700-800 crore in debt to help fund the acquisition of TCNS Clothing.
The managing director of Aditya Birla Fashion and Retail Limited, Ashish Dikshit, told ET that they need around rupees 700 to 800 crore via external debt for funding. This amount they said they will have to raise. The remaining rupees 800 crores will be funded via internal accruals. And he said that their balance sheet is strong to raise that.
On Friday, ABFRL signed an agreement to buy a 51 percent stake in TCNS.
BusinessInsider reported that after the merger, each shareholder of TCNS shall receive eleven shares of ABFRL for every 6 shares held in TCNS.
The acquisition can be 1 of the biggest deals in the Indian fashion space.
The chairman of Aditya Birla Group, Kumar Mangalam Birla, said that this takeover of TCNS will prepare ABFRL for the next part of growth.
By embracing the portfolio of TCNS, they are reinforcing their commitment to ethnic wear, the biggest category in the apparel industry. With this takeover, the quick-growing Aditya Birla Fashion and Retail Limited platform is set for the next part of transformational growth.
Aditya Birla Fashion and Retail Limited will offer to take over up to 29 percent of the stake at rupees 503. This is per share from public shareholders. The company will acquire the remaining stakes from the founder promoters to reach an overall shareholding of 51 percent in TCNS. After the transaction, TCNS will be merged with Aditya Birla Fashion and Retail Limited. The public shareholders of TCNS will receive eleven shares of Aditya Birla Fashion and Retail Limited for every six shares they hold in TCNS.
TCNS is among the major players in the market of women’s ethnic wear. The overall apparel market is very unorganized, speaking in terms of the branded apparel space. The retail share of women’s clothing may increase to 35 percent by the financial year 2025 from 31 percent in the financial year 2020. This is according to a report by Antique Stock Broking.
In the last few years, Aditya Birla Fashion and Retail Limited acquired famous brands such as Sabyasachi, House of Masaba, Jaypore, etc. With this new acquisition, it added some more market expectations. On Monday, shares of Aditya Birla Fashion and Retail Limited closed 3.38 percent lower at rupees 206.95. The shares of TCNS Clothing ended 19.99 percent lower at rupees 416.75.
TCNS had great sales of rupees 896 crores during the financial year 2022 from 650 exclusive brand outlets and 2,300 big store outlets. With this takeover, Aditya Birla Fashion and Retail Limited’s ethnic wear portfolio can reach rupees 5,000 crores in the next 3 years, with TCNS contributing about 2,000 crores.
About TCNS
TCNS is the short form of Trilok Chand and Narender Singh. They founded TCNS Ltd. This is a company that manufactures and exports garments. Onkar Singh Pasricha (67 years) is the Executive Director and Chairman of the Company.
About Aditya Birla Fashion and Retail Limited (ABFRL)
ABFRL is a fashion retail company which is headquartered in Mumbai, India. ABFRL holds a network of 3468 and more stores with 25,000 multi-brand outlets.
