Aditya Birla Fashion proposes to demerge Madura Fashion business into separate listed entity

2024-04-02 06:35:03

Fashion Demerger Lifestyle Brands Aditya Birla Fashion Madura Fashion Retail Industry Brand Demerger NCLT Scheme Growth Strategy Capital Infusion Fashion Retail

Madura Fashion and Lifestyle to Spin-off as Separate Listed Entity

The Madura Fashion and Lifestyle (MFL) business segment, comprising four renowned lifestyle brands - Louis Phillippe, Van Heusen, Allen Solly, and Peter England - alongside casual wear brands American Eagle and Forever 21, sportswear brand Reebok, and the innerwear business under Van Heusen, is set to undergo a demerger. This strategic move aims to establish a distinct entity dedicated to these brands, ensuring a focused approach to their growth trajectory.

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The newly formed entity will boast a robust balance sheet, laying a solid foundation for its future expansion plans. Following requisite approvals, the demerger will be executed through an NCLT scheme of arrangement. Importantly, all shareholders of Aditya Birla Fashion and Retail Limited (ABFRL) will inherit identical shareholding in the newly formed entity.

With this demerger, ABFRL will pivot towards high-growth segments poised for exponential expansion. These segments include the migration from unbranded to branded apparel, premiumization trends, the surge in super-premium and luxury segments, and the rapid ascent of Gen Z-focused digital-first brands.

Upon completion of the demerger, ABFRL will embark on a capital-raising endeavor within the subsequent 12 months. This infusion of growth capital will fortify its balance sheet, amplifying its capacity to seize emerging opportunities.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, commented, "Our fashion and retail business has evolved significantly over the years, expanding from 5 brands across 2 categories to a vibrant portfolio encompassing 20 brands across all lifestyle categories." He further emphasized, "As we propel into the next phase of growth transformation, optimizing our capital structure becomes imperative. The transition to a streamlined and agile structure is geared towards unlocking unique value creation opportunities, thereby fostering long-term value for stakeholders."

In response to this strategic announcement, shares of Aditya Birla Fashion and Retail surged by 3 percent, reaching Rs 211.70 on Monday, as reported by IANS.

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