Kishore Biyani-led Future Group will spin off its branded apparel business Pantaloons brand into a separate entity. Aditya Birla Nuvo will infuse Rs 1,600 crore to acquire controlling stake in the new unit.
According to the deal, Kumar Mangalam Birla-led Aditya Birla Nuvo will subscribe to debentures amounting to Rs 800 crore issued by Pantaloons Retail India Limited.
On completion of the demerger process, subject to necessary and statutory approvals, the demerged entity will be automatically listed at the Bombay Stock Exchange and the National Stock Exchange, Future Group said in a statement.
"The proposed acquisition is in line with our strategic intent to be on the top of the league and to create the largest integrated branded fashion player in the country through an extension in to the value segment," Aditya Birla Nuvo Limited chairman Kumar Mangalam Birla said in a statement.
On completion of the demerger process, the debentures will convert into equity in the demerged entity of Pantaloons format.
Pantaloon Retail India currently operates the 'Pantaloon' chain of fashion apparel and accessories stores in 35 cities.
The proposed transaction is likely to be completed within eight to 10 months, subject to the finalisation of the Scheme of Arrangement, due diligence and statutory and other requisite approvals.
With this acquisition, Aditya Birla Nuvo will have multiple brands, store formats and a complete range across categories - casual wear, ethnic wear, formal wear, party wear and sports wear for men, women and kids.
Launched in 1997, the Pantaloon format is spread in 35 cities with 65 stores and 21 factory outlets covering total retail space of over 2 million square feet.
with inputs from IANS