The board of directors of Aditya Birla Fashion and Retail Ltd (ABFRL), at its meeting on Monday, has authorised the management of the company to evaluate the vertical demerger of Madura Fashion & Lifestyle business from ABFRL into a separate listed company.
The proposed demerger will enable the creation of two separately listed companies as independent growth engines with distinct capital structures and parallel value creation opportunities, the company said in BSE filing.
He further said, “As the platform embarks on its next transformational phase of growth, there is scope to re-evaluate capital structures to optimise different parts of the portfolio. The move towards a more simplified and streamlined architecture is designed to unlock distinct opportunities for value creation. This strategic realignment is poised to significantly enhance long-term stakeholder value.”
The Madura Fashion & Lifestyle (MFL) business segment consists of four lifestyle brands, Louis Phillippe, Van Heusen, Allen Solly and Peter England along with casual wear brands.
American Eagle and Forever 21, sportwear brand Reebok and the innerwear business under Van Heusen will be demerged into a separate listed entity. This portfolio has built a leadership position over a long time and has a proven track record of delivering consistent revenue growth, profitability, strong free cash flows and high return on capital.
The entity will have a strong balance sheet to power its future growth aspirations. Post necessary approvals, the demerger will be implemented through an NCLT scheme of arrangement, and all shareholders of ABFRL will have identical shareholding in the newly formed entity.
Post demerger, the remaining ABFRL will be focused on high-growth segments where there are tailwinds from a shift from unbranded to branded, premiumisation, rise of super premium and luxury, and rapid growth in Gen Z focused digital-first brands.
First Published: Apr 01 2024 | 7:56 PM IST
