Aditya Birla Fashion and Retail demerger: ABFRL shares experienced a substantial decline of 67% to Rs 88.80 on the NSE during Thursday’s trading session, on the record date for the previously sanctioned demerger of its Madura Fashion & Lifestyle operations into an independent listed company.The significant 67% reduction in share value can be attributed to the demerger specifications, which stipulate that ABFRL shareholders will obtain one equity share in Aditya Birla Lifestyle Brands Ltd (ABLBL) for each share owned in ABFRL, according to an ET report.The restructuring plan, which received approval from ABFRL’s board in the previous year, entails the separation of the Madura Fashion and Lifestyle (MFL) division into a newly established entity — ABLBL.Following the demerger adjustment, the share price, which settled at Rs 269.15 on Wednesday, began trading at Rs 97 on Thursday and subsequently reached a session low of Rs 88.80 – a 67% reduction from the previous day’s closing price.However, setting aside the demerger effect, the stock registered a 9.4% decrease from its opening value of Rs 97 during the trading session.The restructuring will establish two separate listed entities, each with their own capital frameworks and expansion plans. ABLBL will manage key fashion brands including “Louis Philippe, Van Heusen, Allen Solly, Peter England, Reebok,” alongside international casual wear brands “American Eagle and Forever 21,” and the Van Heusen innerwear division.The separation process will be executed through an NCLT arrangement scheme, ensuring that existing ABFRL shareholders maintain identical ownership percentages in both the resulting companies.The financial reorganisation includes the transfer of Rs 1,000 crore from ABFRL’s existing debt of Rs 3,000 crore (as of March 31, 2024) to ABLBL, whilst ABFRL retains Rs 2,000 crore of the debt.Additionally, the organisation intends to secure Rs 2,500 crore in funding within 12 months following the demerger, including contributions from promoters.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
