Ad-for-equity media investor Bennett Coleman & Co Ltd (BCCL) is increasing its bet on the country’s largest retail company Pantaloon Retail (India) by subscribing to fresh shares worth Rs 200 crore ($37.5 million).
BCCL which picks minority equity stakes in private as well as public companies in lieu of ad space on its various media properties, is already an investor in Pantaloon Retail. It held a little over 4 per cent stake in the public firm through two entities.
The fresh shares will be allotted to BCCL at Rs 245 a piece or 32.5 per cent premium to the last traded price of Pantaloon Retail. The company’s scrip rose 1 per cent to close at Rs 184.85 a share on the BSE in a weak Mumbai market on Thursday.
With the fresh share purchase, BCCL’s holding will move up to 7.7 per cent on a diluted equity base. This will make it the single largest non promoter shareholder of the company. At the current market price its stake would be valued at Rs 300 crore, making Pantaloon one of the biggest portfolio company for the media group.
This deal comes at the same time as a corporate deal wherein Aditya Birla Group through Aditya Birla Nuvo is acquiring a majority stake in the apparel & lifestyle fashion retail business.
Pantaloon Retail (India) board on Thursday also approved the issue of 800 Optionally Fully Convertible Debentures (OFCDs) at a price of Rs 1 crore each aggregating to Rs 800 crore in a preferential allotment to Aditya Birla Nuvo &/or its wholly owned subsidiary Peter England Fashion and Retail Limited.
The company is also changing its name to Future Retail India Limited, which fits in with the remaining business in the company after the recent deal.
Early this week, Pantaloon Retail said it is spinning out its apparel retail business as a separate listed firm and will sell a majority stake in the venture to Aditya Birla Nuvo. In the first leg of the deal, Pantaloon Retail will issue convertible debentures worth Rs 800 crore to Aditya Birla Nuvo. It will them demerge the Pantaloons apparel retail format (or Pantaloons Format business) into a separate listed firm and Aditya Birla Nuvo’s debentures would convert into equity of the demerged entity.
Aditya Birla Nuvo will also make an open offer of a minimum 26 per cent to the shareholders of the resulting entity. Post this, it will hold at least 50.01 per cent stake in the demerged entity.
Pantaloons Format business has 65 stores and 21 factory outlets across 35 cities covering total retail space of over 2 million sqft.
Post this restructuring, Pantaloon Retail will continue to control and run its other retail operations housed under Big Bazaar, Food Bazaar, Brand Factory, Central, Home Town and eZone among others.
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