CCI approves acquisition of TCNS Clothing by ABFRL; stock up

Shares of Aditya Birla Fashion and Retail Ltd (ABFRL) were on focus on June 28, a day after the Competition Commission of India (CCI) approved the company's acquisition of a 51% stake in the women's clothing brand, TCNS Clothing Ltd for ₹1,650 crore. The deal is touted to be the largest in the Indian fashion space. Following the development, shares of Aditya Birla Fashion and Retail, a subsidiary of Aditya Birla Group, surged as much as 1.8% to hit an intraday high of ₹214.80 apiece on the BSE in early trade.

On Wednesday, the share price of the apparel major opened a gap-up at ₹213.80, higher by 1.3% against the closing price of the previous session at ₹210.85. At the time of reporting, shares of ABFRL were trading 0.90% higher at ₹212.75. At the current share price, shares of ABFRL are trading 40.8% lower than the 52-week high of ₹359.40, that the company touched on November 1 last year. The share price of the apparel major is trading 15.3% higher than the 52-week low of ₹184.40, that the company touched on May 23 this year. In the early trade, the company’s market capitalisation stood at ₹20,185.69 crore with 57,359 shares exchanging hands on the BSE against the two-week average of 2.11 lakh shares.

Meanwhile, shares of TCNS Clothing Ltd surged as much as 2.2% to hit an intraday high of ₹424 apiece on the BSE. The scrip opened a gap-up at ₹424 as against the closing price of the previous session at ₹414.55. In the early trade, the market capitalisation of the clothing brand stood at ₹2,636 crore with 3,190 shares exchanging hands on the BSE against the two-week average of 0.68 lakh shares.

Last month, ABFRL entered into a definitive agreement to acquire a 51% stake in TNCS Clothing Ltd. TCNS Clothing Ltd is engaged in the manufacturing, distribution and sale of women’s apparel, jewellery, footwear, and beauty products, currently undertaken under the brands i.e., W, Aurelia, Wishful, Elleven and Folk Song. As part of the deal, ABFRL will make a conditional open offer to acquire up to a 29% stake at ₹503 per share from public shareholders and acquire the remaining stake from the founder promoters to reach an overall shareholding of 51% in TCNS. Following the completion of the transaction, TCNS will be amalgamated with ABFRL under the merger scheme wherein public shareholders of TCNS (as of the effective date) will receive 11 shares of ABFRL for every 6 shares that they hold in TCNS.

ABFRL had earlier said that this transaction will be carried out through the acquisition of the founding promoter’s stake through a sales and purchase agreement (SPA) and a conditional public open offer followed by a merger between the two entities.

ABFRL has revenue of ₹8,136 crore, and has a retail space of 9.2 million sq. ft. with a network of 3,468 stores across around 28,585 multi-brand outlets, with 6,515 points of sales in department stores across India (as on March 31, 2022). Over the last five years, ABFRL has built its ethnic portfolio through a series of strategic and calibrated actions.