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Aditya Birla Nuvo gets CCI approval for Pantaloon deal

Fair trade regulator CCI has given green signal to the takeover of Future group's Pantaloon brand business by Aditya Birla Nuvo.
New Delhi:

Fair trade regulator CCI has given green signal to the takeover of Future group's Pantaloon brand business by Aditya Birla Nuvo.

Aditya Birla Nuvo Ltd (ABNL), part of Kumar Mangalam Birla-led group, through a subsidiary has proposed to acquire a majority of Pantaloon format business from Kishore Biyani-led Future group.

"... the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India," the CCI order, dated December 21, said.

This order has come on an application filed on October 8.

The proposed combination relates to acquisition of business of Pantaloon Retail (India) Ltd (PRIL) by ABNL through the latter's subsidiary Peter England Fashions & Retail Ltd (PEFRL).

The Competition Commission of India (CCI) had in August termed as invalid an application seeking nod for this takeover deal as the final deal was yet to be approved by the boards of the concerned companies at that time.

In late April, Future Group had said that Aditya Birla Nuvo would infuse Rs 1,600 crore into its flagship 'Pantaloon' and would acquire a majority stake in the store chain, which would be later demerged to be listed as a separate entity.

As a part of the deal between the two companies, the Pantaloon format would be demerged from PRIL.

A diversifed entity, ABNL through its division – Madura Fashion & Lifestyle manufactures and sell apparel, footwear and accessories under various brands such as Louis Philippe, Van Heusen and Allen Solly.

ITSL, a subsidiary of ABNL, is the parent company of PEFRL (Peter England Fashions & Retail Ltd).

Meanwhile, PRIL (Pantaloon Retail (India) Ltd) is a listed company with presence in retail fashion and lifestyle business, among others.

Going by estimates, the organised Appare, Footwear and Accessories (AFA) retail market is worth about Rs 42,500 crore, out of which the shares of PRIL and ABNL "is stated to be small".

The Commission also noted that, among others, recent liberalisation of Foreign Direct Investment (FDI) norms in single and multi-brand retail trading would further enable many international AFA brands to compete in India more vigorously.

"... as part of the proposed combination, ABNL is acquiring only a few brands out of the many brands offered by PRIL in the Pantaloons Format Business," the Commission observed.

As per the notice, ABNL and PRIL are not entering into any non-compete arrangement and the latter would continue to compete in the apparel, footwear and accessories business through various other stores.

Meanwhile, as part of the proposed transaction, ABNL (Aditya Birla Nuvo Ltd) would subscribe to debentures amounting to Rs 800 crore issued by PRIL and on completion of the demerger process, the debentures would convert into equity in the demerged entity of the Pantaloon format.

Further, ABNL would take care of Rs 800 crore debt of Pantaloon.

The notice seeking approval for the deal was jointly moved by ABNL, PEFRL, Indigold Trade and Services Ltd.

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