Aditya Birla Fashion has reportedly surpassed Nykaa and became the front-runner to purchase TCNS Clothing. Companies including Reliance, Trent, Aditya Birla Fashion and Nykaa were reportedly competing to acquire TA Associates' 29.24 per cent stake in TCNS Clothing, which owns brands like W, Aurelia and Elleven.
According to a report by The Economic Times, 61.24 per cent of the company is owned by the retailer's promoters, the Pasricha family of New Delhi, and PE investor TA Associates. They have given Credit Suisse the responsibility of finding a strategic or financial buyer. The deal will result in an open offer for an additional 25 per cent of the company. As per the report, the new investor may be able to acquire up to 86.24 per cent of TCNS for Rs 3,016 crore if the open offer is fully subscribed. The market capitalisation of TCNS Clothing as of today is reportedly Rs 3,754 crore.
"The company keeps on evaluating various opportunities on an on-going basis and in this regard consult with various advisors," The Economic Times quoted Amit Chand, chief financial officer, TCNS Clothing Co, as saying. He further added, "As and when any event becomes a reportable event, the company informs the same to the stock exchanges in accordance with applicable provisions of the Sebi regulations."
As per the report, the current negotiations are being held up by the promoters' demand for a significant control premium. Deal-breakers could also include disagreements over-valuations.
"The non-binding bids went in during Diwali. The business, however, has not performed as it had promised even though the recent quarters have seen an uptick, largely on account of festivities and offices reopening," The Economic Times quoted the CEO at a rival retail chain, as saying.
According to the report, no parties have signed any exclusive agreements. Although it hasn't been decided yet, the promoters and TA Associates may keep a small stake for potential upside. In 2016, for $140 million, TA Associates reportedly purchased a 40 per cent stake in TCNS. However, the private equity firm sold a portion of that investment in 2018 during the company’s initial public offering.
After the pandemic restrictions were eased, investors' interest in apparel companies increased since more individuals are now purchasing new clothes for formal occasions, everyday wear, and home use. With its brands W and Aurelia, TCNS Clothing is a significant player in the industry.
TCNS Clothing’s revenue jumped 46 per cent to Rs 350 crore in September quarter while its profit fell 31 per cent to Rs 7.6 crore from Rs 11 crore during the same period last financial year.
