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Flipkart to buy 8% stake in Aditya Birla Fashion and Retail for Rs 1500 crore

retail | IST

Flipkart to buy 8% stake in Aditya Birla Fashion and Retail for Rs 1500 crore

Walmart-owned Flipkart is set to invest Rs 1,500 crore in Aditya Birla Fashion and Retail (ABFRL) for a 7.8 percent stake, the fashion apparel company said.
As part of the deal, ABFRL will issue shares on a preferential basis to Flipkart at Rs 205 per share, a 37 percent premium over the last closing price.
ABFRL has entered into a commercial agreement with Flipkart for the sale, distribution of various brands of the company.
The deal gives the much-needed fund to ABFRL to reduce debt and a strong global partner while for Flipkart, it provides a portfolio of established fashion brands and a strong local partner.
ABFRL has a portfolio of fashion brands with over 8,000 points of sale across the country including over 2,000 exclusive ABFRL brand outlets. The company has a healthy and diversified portfolio mix consisting of four leading brands, Louis Philippe, Van Heusen, Allen Solly and Peter England. It has tie-ups with leading global brands like Ralph Lauren, Simon Carter, Hackett and Ted Baker.
"The investment agreement inter-alia provides for some rights such as preemption rights and right of first refusal which are for a limited period of between 1-5 years from the date of allotment of equity shares or if the equity shareholding of the investor falls below a certain threshold," the company said.
CNBC-TV18 had earlier reported that ABFRL, which has been hit hard due to the COVID-19-induced lockdown, was looking to expand its online presence. Sources had told CNBC-TV18 that the group was in talks with global giants like Walmart and Amazon to explore various options for a strategic tie-up.
According to the sources, who did not want to be named, Aditya Birla Group had been actively exploring various options with Walmart for an alliance through Flipkart or through its online fashion retail player, Myntra.
The company sees online reach as key to growth in the post-COVID world and eyes an integrated retail model beyond omnichannel approach.
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