Will make an open offer of at least 26 per cent
Aditya Birla Nuvo (ABNL) will acquire a controlling stake in Future Group's ‘Pantaloons Format' business following its demerger from Pantaloon Retail (India) Ltd. (PRIL).
The Pantaloons format, launched by Future Group in 1997, has 65 stores in 35 cities and a reverse logistics chain, Pantaloons Factory Outlet, which has 21 stores. In a statement, ABNL said the Pantaloon format would be demerged from PRIL, a BSE and NSE listed company.
As per the transaction, PRIL will issue debentures to ABNL worth Rs.800 crore at mutually agreed terms, convertible in equity shares of the resulting entity, the Pantaloons Format business.
In a transaction that is expected to be completed in 8-10 months, PRIL will demerge its Pantaloons Format business through a court scheme of arrangement and transfer the net assets of its business, its apportioned debt of Rs.800 crore and debentures of Rs.800 crore to the resulting entity. On completion of the demerger, the debentures will be converted into equity in the demerged entity. ABNL will make an open offer of at least 26 per cent to the shareholders of the resulting entity. After its listing and on conversion of debentures into equity, ABNL's holding, after the open offer, will be a minimum of 50 per cent. It will then become a subsidiary of ABNL.
In a statement, Kumar Mangalam Birla, Chairman, (ABNL) said, “the proposed acquisition is in line with our strategic intent to be on top of the league and to create the largest integrated branded fashion player through an extension into the value segment. ”
Future Group said that post-demerger, the total debt of Pantaloon Retail would decline by Rs.1,600 crore and existing shareholders of PRIL, including promoters, would continue to own shares in the demerged entity.