ABFRL to acquire controlling stake in ethnic wear owner TCNS

The transaction will be done through a conditional public open offer followed by acquisition of the founder promoter’s stake through an SPA and a merger between the two entities.

The value of the promoter stake and open offer consideration for TCNS is Rs. 1650 crores for 51% stake, making it one of the biggest deals in the Indian fashion space.

In December, Peppermint had reported that (ABFRL) has emerged as the front runner to acquire majority stake in TCNS Clothing Limited.

ABFRL said in a filing to the exchanges that the acquisition is in line with the company’s objective of creating a comprehensive fashion portfolio across consumer segments and price points.

“As India stands at the cusp of a multi-decade consumption boom, ABFRL is at the forefront of shaping the fashion landscape of our vibrant nation. For ABFRL, the TCNS deal is indeed a significant milestone as it complements our existing portfolio of exceptional brands across the entire spectrum of Indian fashion. By adopting TCNS’ portfolio of favorite women’s ethnic brands, we reinforce our commitment to ethnic wear, the largest category in the apparel industry. With this acquisition, the fast-growing ABFRL platform is poised for the next phase of transformational growth, Kumar Mangalam Birla, Chairman, Aditya Birla Group, said in a statement.

With this acquisition, ABFRL’s ethnic wear portfolio is expected to reach 5000 crores in the next three years.

As part of the transaction, ABFRL will make a conditional open offer to acquire 29% stake 503 per share from public shareholders and the remaining stake from the founder promoters to reach the overall shareholding of 51% in TCNS. As aforesaid, TCNS will be amalgamated with ABFRL under the Scheme of Amalgamation, wherein public shareholders of TCNS (as on the Effective Date) will receive 11 shares of ABFRL for every 6 shares that they hold in TCNS.

The transaction is subject to customary regulatory approvals.

TCNS reported business 933.03 crore with profit after tax as on December 31, 2022 10.58 crores. The net worth of the company was 635.68 crore by September 30, 2022. TCNS was incorporated in December, 1997.

Ashish Dixit, Managing Director, ABFRL said, “This deal is an important part of our strategy to build India’s most comprehensive ethnic wear portfolio.

“As young Indians identify with a new-found confidence in their identity woven around Indian culture and heritage, the next set of leading consumer brands will be built in the Indian ethnic wear space. TCNS, through its brands W, Aurelia, Wishful, Folksong and Eleven, is catering to the fashion needs of Indian women across markets and price points.”

Over the past 5 years, ABFRL has built up its ethnic portfolio through a series of strategic actions – The company’s entry into the branded ethnic wear business includes brands such as Jaypore, Taswa and Marigold Lane. The company also has strategic partnerships with designers Shantanu and Nikhil, Tarun Tahiliani, Sabyasachi and House of Masaba.

ABFRL is part of the Aditya Birla Group. With revenue of Rs. 8,136 crore spread across 9.2 million sq ft of retail space (as on March 31, 2022), it is one of the top pure-play fashion companies. The company has a network of 3,468 stores across approximately 28,585 multi-brand outlets, including 6,515 points of sale in departmental stores across India (as on March 31, 2022).