ABFRL To Acquire Controlling Stake In Ethnic Wear Owner TCNS

This transaction with be carried out through an acquisition of the founding promoter’s stake through a SPA and a conditional public open offer followed by a merger between the two entities.

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

In December, Mint had reported that (ABFRL) had emerged as the front runner to acquire a majority stake in TCNS Clothing Ltd.

The acquisition is in line with the company's objective of building a comprehensive fashion portfolio across consumer segments and price points, ABFRL said in a filing to the exchanges.

“As India stands on the cusp of a multi-decadal consumption boom, ABFRL is a forerunner in 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 embracing TCNS's portfolio of loved women’s ethnic brands, we are reinforcing 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 crore in the next three years.

As part of the transaction, ABFRL will make a conditional open offer to acquire up to 29% stake at ₹503 per share from public shareholders and acquire the remaining stake from the founder promoters to reach an overall shareholding of 51% in TCNS. Pursuant to the above, TCNS will be amalgamated with ABFRL under the merger scheme wherein public shareholders of TCNS (as on 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 a turnover of ₹933.03 crores as on December 31, 2022 with a profit after tax of ₹10.58 crores. The company’s net worth stood at ₹635.68 crores as on September 30,2022. TCNS was incorporated on December, 1997.

This transaction is a pivotal piece of our strategy of building India’s most comprehensive ethnic wear portfolio, said Ashish Dikshit, Managing Director, ABFRL.

“As young Indians identify a new-found confidence in their identities 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 & Elleven, is catering to the Indian women’s fashion needs across markets and price points," he added.

Over the last 5 years, ABFRL has built its ethnic portfolio through a series of strategic actions—the company’s foray into branded ethnic wear business includes brands such as Jaypore, Tasva & Marigold Lane. The company also has strategic partnerships with Designers Shantanu & Nikhil, Tarun Tahiliani, Sabyasachi and House of Masaba.

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