Peter England board okays Pantaloon deal, stock soars

Shares of Pantaloon Retail surged in morning trade despite a sluggish market after Aditya Birla group firm Peter England Fashions & Retail’s board on Sunday approved the demerger of Pantaloon format business and fixed the share swap ratio at 1:5 . This means for every five shares of Pantaloon, the shareholders will get one Peter England share.

At 10 am, Shares of Pantaloon Retail were up 4.56 percent at Rs 150.10 on the Bombay Stock Exchange, while the Sensex was flat, up 0.06 percent at 17759.76. Interestingly, the stock of Pantaloon Retail India Ltd (PRIL) has fallen 24% since April 30, 2012, after Future Group promoter Kishore Biyani announced that PRIL’s fashion business would be demerged and sold to the Aditya Birla Group.

The developments mark a step closer towards Aditya Birla Group’s proposed acquisition of majority stake in Kishore Biyani-led group’s flagship Pantaloon format apparel retail business unit. The transaction will see 65 Pantaloons stores and 25 Pantaloons Factory Outlets being transferred to Peter England Fashions. Pantaloon Retail will also transfer Rs 1,600 crore of debt to Peter England Fashions as part of the deal, which is awaiting regulatory approval.

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[caption id=“attachment_449594” align=“alignleft” width=“380”]  The group added that it expects the transaction to be completed within six months, subject to the requisite statutory and regulatory approvals, including those from the stock exchanges, shareholders, creditors, Competition Commission of India (CCI) and the High Court.[/caption]

The equity shareholders of Pantaloon Retail will receive one fully-paid up equity share of Rs 10 each in PEFRL for five fully-paid up shares (including DVR equity shares) of Rs two each held in PRIL. Under the transaction, PRIL will also transfer all undertakings, business, activities and operations pertaining to the ‘Pantaloons Format’ business to Peter England. Besides, a debt of Rs 1,600 crore will also be transferred to PEFRL. The date of transfer has been fixed at July 1, 2012.

Peter England will issue equity shares to PRIL shareholders as per the Board approved share entitlement ratio and post-demerger, the holding of ABNL through its subsidiary PEFRL, will be 50.09 percent.

As part of the Scheme, ABNL and/or its affiliates intend to make a voluntary open offer to other shareholders of PEFRL.

The transaction is expected to be completed within six months, subject to the requisite statutory and regulatory approvals, including those from the stock exchanges under the

Listing Agreement, shareholders, creditors, Competition Commission of India and the High Court.

The share entitlement ratio has been arrived at based on the recommendations of Deloitte Touche Tohmatsu India and Grant Thornton India LLP.

Amarchand & Mangaldas & Suresh A Shroff & Co is the legal advisor to the transaction.

Aditya Birla Nuvo is a $4.5 billion conglomerate and over the years it has ventured into sectors like financial services (life lnsurance, asset management, NBFC, private equity, broking, wealth management and general insurance advisory), telecom, fashion & lifestyle and IT-ITeS.

It is part of the Aditya Birla Group, a $40 billion Indian multinational, which operates in 36 countries across the globe with over 133,000 employees.

With inputs from Agencies