Aditya Birla Fashion & Retail to acquire controlling 51% stake in TCNS Clothing in Rs 1,650 crore deal

Aditya Birla Fashion & Retail Ltd (ABFRL) on Friday announced it will acquire a majority stake in women's branded apparel company TCNS Clothing, in a deal worth Rs 1,650 crore.

The Aditya Birla group firm has entered into definitive agreements to acquire a 51 per cent stake in TCNS Clothing, which owns ethnic brands such as W, Aurelia, Wishful, Folksong and Elleven, said a joint statement.

As per the deal, it will acquire TCNS Clothing's founding promoter's stake through an SPA (Share Purchase Agreement) and a conditional public open offer followed by a merger between the two entities, it said.

"The value of the promoter stake and open offer consideration for TCNS is Rs 1,650 crore for 51 per cent stake, making this one of the largest deals in the Indian fashion space," the statement said.

TCNS Clothing had a turnover of Rs 896.05 crore for the financial year which ended on March 31, 2022.

"The acquisition is in line with the company's objective of building a comprehensive fashion portfolio across consumer segments and price points," it added.

Besides, the acquisition is also subject to regulatory approvals from the Competition Commission of India (CCI), SEBI, stock exchanges, National Company Law Tribunal (NCLT) and approval by the requisite majority of shareholders of the ABFRL, the statement said.

The company expects the deal to be completed within 9-12 months.

"Pursuant to the above, TCNS will be amalgamated with ABFRL under the merger scheme wherein public shareholders of TCNS (as on effective date) will receive 11 shares of ABFRL for every 6 shares that they hold in TCNS," it added.

Over the cost of acquisition or the price at which the shares are acquired, ABFRL said it is "at a consideration of Rs 503 per sale shares, subject to adjustments under the SPA".

Moreover, the "open offer is being made at Rs 503 per equity share, which has been determined in accordance with SAST Regulations," the statement added.

Under the open offer, ABFRL "will acquire up to 29 per cent of the Expanded Share Capital, subject to Minimum Level of Acceptance," it added.

Commenting over the development, Aditya Birla Group chairman Kumar Mangalam Birla said for ABFRL, the TCNS deal is indeed a significant milestone as it complements its existing portfolio of exceptional brands across the entire spectrum of Indian fashion.

"By embracing TCNS's portfolio of loved women's ethnic brands, we are reinforcing our commitment to ethnic wear, the largest category in the apparel industry. With this acquisition, the fast-growing ABFRL platform is poised for the next phase of transformational growth," he said.

TCNS managing director Anant Daga said, "Over the last 20 years, we have built India's most successful women's franchise on the back of our leading brands. The market continues to offer long-term growth opportunities and our partnership with ABFRL will help us fully realise this potential."

"ABFRL's proven brand-building capability, distribution strength and strong ecosystem of partners will help our brands into its next phase of growth and profitability," he added.

ABFRL earned a revenue of Rs 8,136 crore for the financial year which ended on March 31, 2022. It is India's first billion-dollar pure-play fashion powerhouse.

The company has a network of 3,468 stores and a presence at 6,515 points of sales in department stores across India, as on March 31, 2022.

It has a repertoire of India's largest brands such as Louis Philippe, Van Heusen, Allen Solly and Peter England. It also owns leading fashion retail chain Pantaloons.

Besides, it is also a multi-brand retailer of international brands and has long-term exclusive partnerships with Ralph Lauren, Hackett London, Ted Baker, Fred Perry, Forever 21, American Eagle and Reebok.

In the ethnic wear business, it owns brands such as Jaypore, Tasva & Marigold Lane.

ABFRL also has strategic partnerships with designers Shantanu & Nikhil, Tarun Tahiliani, Sabyasachi and the House of Masaba.