New Delhi, October 23
Walmart-owned Flipkart will buy a 7.8% stake in Aditya Birla Fashion and Retail for Rs 1,500 crore as it taps into the offline retail player's large bank of apparel outlets to bolster its presence in the high-margin fashion business.
Billionaire Kumar Mangalam Birla's retail business will issue preference shares to Flipkart, giving it a 7.8% stake, Aditya Birla Fashion said in a stock exchange filing on Friday.
The transaction was at Rs 205 per share, a 33.6% premium to Thursday's closing price of Rs 153.4. Aditya Birla Fashion's current owners will hold a 55.1% stake after the allotment.
Rs 1,500-crore deal
- The transaction, valued at Rs1,500 crore, will be done at Rs205 per share, a 33.6% premium to Thursday's closing price of Rs153.4
- Aditya Birla Fashion's current owners will hold a 55.1% stake after the allotment
While Flipkart will gain from Aditya Birla Fashion's range of international and Indian brands, the deal will help the company cut down debt, which stood at Rs 2,776 crore as of March 31, 2020.
The investment will give it a bigger foothold as it battles it out with rival Amazon.com and billionaire Mukesh Ambani-run Reliance Industries, which is rapidly expanding its retail business via major acquisitions and funding from overseas investors, including Silver Lake and KKR.
In August, Reliance Retail Ventures, an arm of Reliance Industries, announced a plan to buy Indian retail pioneer Future Group's units for Rs 24,713 crore.
Aditya Birla Fashion — which owns the rights to sell Forever 21, American Eagle Outfitters and Ralph Lauren branded clothes, among others, in the country — has a network of about 3,000 stores, including Pantaloons fast-fashion chain.
It also has a presence across approximately 23,700 multi-brand outlets with over 6,700 points of sale in department stores.
Aditya Birla Group chairman Kumar Mangalam Birla said this partnership is an emphatic endorsement of the growth potential of India. — PTI
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