CCI Approves Flipkart’s Acquisition of 7.8% in Aditya Birla Fashion and Retail
By: Ashwathy Nair
The issuance of equity shares on a preferential basis to Flipkart for ₹1,500 crores was approved by Aditya Birla Fashion.
In addition to approval of the shareholders by way of postal ballot that was received on 22nd November 2020, the issue was considered as subject to regulatory approvals and accomplishment of customary closing conditions under the investment agreement.
The Vice-President, Company Secretary and Compliance Officer at Aditya Birla Fashion, Geetika Anand stated that “For its planned acquisition of a 7.8 per cent stake in the company on a completely diluted basis, the CCI approved Flipkart’s approval letter dated 20th January.”
In a regulatory filing at stock exchanges, she stated that “Upon the fulfilment of customary conditions, the completion of the preferential issue remains conditions.”
Last year, in the month of August, the company has completed a rights issue of ₹1,000 crores successfully by offering 9.05 crore shares at ₹110 per share. Promoters, major shareholders and institutional investors showed strong interest in the issue.
With a strong bouquet of leading fashion brands and retail formats, Aditya Birla Fashion and Retail is the largest pure-play fashion and lifestyle business in India.
The company is known for having a network of more than 3,000 stores and presence across 22,000 multi-brand outlets with more than 5,400 points of sales in department stores across India.
Aditya Birla Fashion and Retail stock, at 11 am, was trading 3.8 per cent higher at ₹180.10 per unit on BSE Ltd.
The deal will be giving Flipkart certain rights like pre-emption rights as well as the right of first refusal for a period of 1 to 5 years from the date of allotment of equity shares, or along with a board seat, if the equity shareholding of the investor falls below a certain threshold. Being a non-exclusive deal, Aditya Birla Fashion could be continuing to have its own online presence as well as work with other platforms.
The deal, Flipkart – Aditya Birla Fashion and Retail Ltd (ABFRL) was the second-biggest deal of the 2020s in the offline consumer space. In the month of August, last year, (RIL) Reliance Industries’ unit Retail Ventures acquired the retail and wholesale business along with the logistics and warehousing business from Kishore Biyani-led Future Group as going concerns for a gross amount of ₹24,713 crores.
Last year, in the month of July, Flipkart also had announced about ₹260 crores investment into Arvind Fashion’s subsidiary brand Arvind Youth, which owns the brand ‘Flying Machine’.
