 "CCI will reconsider Birla deal; Pantaloon Retail shares cut loss")
Shares of Pantaloon Retail, the flagship company of the Future Group, pared losses after Aditya Birla Nuvo clarified that the Competition Commission of India has not rejectedits bid to buy a majority stake in the retail chain.
In a statement to the BSE, Aditya Birla Group said that CCI will consider the deal once the application is resubmitted. Even a Mint report clarified that rejection was only on technical grounds and the case did not violate any competition law.
“The deal is yet to be approved by the boards of the two companies, so they need to come back to the commission once they approve it, and the case will be reconsidered,” the spokesperson told Mint.
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Pantaloon was trading 3 percent lower on the bourses this morning after the Competition Commission of India rejected the notice seeking the nod for the Aditya Birla - Pantaloon deal yesterday. The competition watchdog sent back the proposal, saying it came in premature and requires a nod from the boards of the respective companies.
According to CCI, the submission made by these two companies triggers the provisions of Section 6 of the Competition Act. That requires a company to seek CCI’s approval post a merger.
“The commission is of the view that the parties have given the notice (for the transaction) prior to the triggering of the relevant provisions…the commission hereby decides that the notice given by the parties is not a valid notice,” CCI said in its order.
According to the application, the companies in discussions are yet to finalise the exact scope of the assets to be acquired and the share entitlement ratio.
Further, the terms of the proposed transaction are subject to the agreement by the companies in the scheme and other definitive documents that are to be executed, the order said.
With Aditya Birla Nuvo’s clarification the stock has managed to pare its losses and is currently down just 1 percent at Rs 163.85.
“Pantaloon Retail and ABNL are committed to giving effect to the memorandum of understanding and are in the process of finalizing certain details of the transaction,” said the filing. Once the application is re-submitted with requisite information, the CCI will reconsider the proposed acquisition as per its procedures and policies.
In May this year,Pantaloon announced that Aditya Birla Nuvo Ltd , a unit of the $28 billion Aditya Birla Group, will acquire a majority stake in Pantaloon Retail, India’s largest listed retail company by revenue.
The Birla group was to infuse Rs1,600 crore in the Pantaloon department retail chain business, which would have helped Future Group lower its debt burden considerably.