Pantaloons Fashions: new India's largest branded apparel retailer ever

In a bid to capitalise large market presence in branded fashion space, India´s fashion mogul Aditya Birla Nuvo has announced the consolidation of its branded apparel business under its subsidiary – Pantaloons Fashion & Retail Limited.

"We are combining businesses of Madura Garments and Pantaloons from Aditya Birla Nuvo through a process of a vertical de-merger and creating a listed apparel retail company. The new company will be the largest not only in the listed but also in the non-listed space," Group Chairman Kumar Mangalam Birla said.

In an operation financially advised by Actis Capital, the respective Boards have agreed to demerge the branded apparel business of Aditya Birla under Madura Fashion (the branded apparel retail division) and Madura Lifestyle (the luxury branded apparel retailing branch) and to house into Pantaloons Fashions, a listed subsidiary of the group.

The day after the merge was announced, shares rallied 20 percent

As established in the sealed deal, shareholders of Aditya Birla will get 26 new equity shares of Pantaloons Fashion for every 5 equity shares held the company, pursuant to de-merger of Madura Fashion.

In turn, shareholders of Madura Garments Lifestyle will get 7 new equity shares of Pantaloons Fashion for every 500 equity shares held in the company, pursuant to demerger of Madura Lifestyle. Meanwhile, preference shareholder of Madura Garment will get 1 new equity share of Pantaloons Fashion

Post demerger, the existing 9.28 Cr equity shares of Pantaloons Fashion will rise up to 77.28 Cr equity shares. An existing shareholder, holding 100 equity shares in Aditya Birla Nuvo will get additional 520 equity shares of Pantaloons Fashion.

Soon after the deal went public, shares of Pantaloon Fashion & Retail (PFRL) jumped 20 percent, trading at Rs 136.60 per share. Aditya Birla Nuvo (ABNL) stock also surged, adding 9 percent intra-day on Monday as group company Aditya Birla merged its apparel businesses into an Rs 5,290 crore entity named Aditya Birla Fashion and Retail.

The new entity will have a retail network of 1,869 exclusive stores and, according to analysts quoted by the CMBC, the combined entity will have a revenue of over Rs 6,000 crore.