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ABFRL board approves demerger of Madura business into separate listed entity

Aditya Birla Fashion and Retail Ltd. (ABFRL) has announced the approval by its Board of Directors for the vertical demerger of Madura Fashion & Lifestyle business (MFL Business) into a newly incorporated company named Aditya Birla Lifestyle Brands Ltd. (ABLBL). The demerged entity is set to be listed separately upon completion of the demerger process.

This strategic move aims to accelerate growth and enhance value creation through the establishment of two distinct listed entities with clear structures and precise capital allocation strategies. ABFRL intends to raise approximately Rs 2500 crore in equity capital within 12 months following the demerger, with promoter participation.

The demerger is expected to unlock significant value for ABFRL shareholders, as each listed entity will have its unique capital structures, independent growth trajectories, and opportunities for value creation.

Upon completion, the demerger will result in two listed companies:

  1. Aditya Birla Lifestyle Brands Ltd. (ABLBL):
    • Lifestyle brands such as Louis Phillippe, Van Heusen, Allen Solly, and Peter England
    • Casual wear brands including American Eagle and Forever 21
    • Sportswear brand Reebok
    • Innerwear business under the Van Heusen brand
  2. Aditya Birla Fashion & Retail Ltd. (ABFRL):
    • Portfolio of multiple growth platforms, including Value Retail (Pantaloons & Style Up), Ethnic Portfolio (including recent acquisitions), Luxury brands, and Digital brands.

Post-demerger, the shareholders of ABFRL will receive one share of ABLBL for every one share held in ABFRL, in addition to their existing shareholding in ABFRL. The business assets and liabilities will be divided between the two companies according to regulatory provisions, with an estimated debt of approximately Rs 1000 crore to be transferred to ABLBL.

ABFRL plans to raise equity capital to strengthen its balance sheet and support the growth of its remaining businesses within 12 months of completing the demerger, with full support from its promoter group.

The proposed demerger is subject to necessary approvals from shareholders, creditors, regulators, and other customary approvals.

PWC LLP serves as the statutory auditors, AZB as the legal counsel, Bansi S Mehta Valuers LLP as the independent valuers, and INGA Ventures Pvt. Ltd. provided the fairness opinion for the transaction.

This move signifies ABFRL’s commitment to enhancing shareholder value and fostering growth in its core businesses.

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