Aditya Birla Fashion And Retail Demerger: Last Day To Buy Shares Before Lifestyle Brands Spinoff

Shares of Aditya Birla Fashion and Retail Ltd. will be in focus on Wednesday, as it marks the last session for investors to buy shares under the T+1 settlement cycle to qualify for receiving equity in the new company after the demerger of its Madura Fashion and Lifestyle business. The demerger ratio is set at 1:1.

The record date determines the eligible shareholders for the spin-off. The ex-date, which coincides with the record date, marks when the share price adjusts to reflect the split.

On May 22, Aditya Birla Fashion and Retail will issue one Aditya Birla Lifestyle Brands Ltd. share for every share held. During a special pre-open session, the constant price for Aditya Birla Lifestyle Brands will be discovered and subtracted from the share price of Aditya Birla Fashion and Retail.

This constant price is calculated as the difference between Aditya Birla Fashion and Retail's closing price on May 21 and the open price of the stock discovered during the special pre-open session. The listing date of Aditya Birla Lifestyle Brands shares will be announced separately.

Following the demerger, the portfolio of Aditya Birla Lifestyle Brands will include lifestyle brands (Louis Phillippe, Van Heusen, Allen Solly and Peter England), casual wear (American Eagle and Forever 21), sportswear (Reebok) and innerwear business (under the Van Heusen brand).

Assets and liabilities will be divided between the two companies. Overall borrowings of Aditya Birla Fashion and Retail stood at Rs 3,000 crore as of March 31, 2024.

The approximate amount to be transferred to Aditya Birla Lifestyle Brands will be Rs 1,000 crore, and the rest will continue to stay with Aditya Birla Fashion and Retail. The company will raise Rs 2,500 crore in capital within 12 months after the completion of the demerger to make its balance sheet strong and fund its remaining business.

Shares of Aditya Birla Fashion and Retail closed 3.01% lower at Rs 277.45 apiece on the NSE on Tuesday, compared to a 1.05% decline in the benchmark Nifty.