-By Ankita Dutta
Ahead of the company’s conference call with researchers and institutional investors on May 8, shares of Aditya Birla Fashion and Retail closed 3.76% lower at 206.15 on the BSE. The phone call concerned the purchase of a 51% share in TCNS Clothing Company. According to Aditya Birla Fashion and Retail, it paid 503 rupees per share to buy between 22% and 30.81% of TCNS’s increased share capital. One of the biggest acquisitions in the Indian fashion sector, the acquisition, which would cost 1,650 crores for a 51% interest, is anticipated to be completed in 9 to 12 months.
On May 5, Aditya Birla Fashion and Retail disclosed the acquisition in a BSE filing, indicating that it had bought between 1,41,92,448 and 1,98,76,757 equity shares of TCNS Clothing for a consideration of 503 per share, equivalent to around 22% and 30.81% of the company’s increased share capital. The filing also said that, subject to the necessary level of acceptance, Aditya Birla Fashion will purchase up to 29% of the increased share capital of TCNS. Following this, Aditya Birla Fashion is going to buy shares that, when added to the equity shares already purchased, will give it 51% of TCNS.
One of the biggest acquisitions in the Indian fashion industry, the acquisition is anticipated to be completed in 9 to 12 months, and the value of the promoter holding and open offer consideration for CNS is $1,650 crore for a 51% share. The top brand of women’s clothing in India is TCNS Clothing, which had a net worth of around 635.68 crores as of September 30, 2022. According to Aditya Birla Fashion’s BSE report, the company had a total revenue of 933.03 crores as of December 31, 2022.
Mixed reactions were received when the acquisition was announced. Following the announcement, Motilal Oswal criticised Aditya Birla Fashion and Retail’s stock due to doubts about the firm’s capacity to incorporate TCNS Clothing’s operations. The brokerage firm also pointed out that this transaction would add to Aditya Birla Fashion and Retail’s debt load, which had already grown because of prior acquisitions.
There were, however, some supportive responses to the acquisition. For instance, ICICI Securities kept its “Buy” recommendation on Aditya Birla Fashion and Retail’s stock, noting that the acquisition will help the business increase its market share in the women’s clothing industry. The brokerage company also mentioned that TCNS Clothing had an established distribution network and a robust portfolio of brands.
Others have emphasised the potential advantages of the acquisition, such as bolstering Aditya Birla Fashion and Retail’s footprint in the women’s apparel category, while others have voiced worries about the company’s debt and integration capabilities. In the upcoming months, the market will be keenly monitoring how the company handles the integration process.