Commission of India (CCI) has turned down the proposal of Aditya Birla Group to takeover majority of business of Future group’s Pantaloon retail chain in India and labeled it as invalid application, as the approval of boards of the concerned companies was yet to be declared.
Through this deal, Kishore Biyani-Owned Pantaloons Retail chain could have easily trim its debt and also get a firm hold into the retail market through Aditya Birla Nuvo Ltd, part of Kumar Mangalam Birla-led group, owned brands such as Allen Solly, Louis Philippe and peter England and many others.
So far, the companies had signed an interim memorandum of understanding (MoU) to agree upon the finer aspects of the deal. However, CCI wants approvals at the board-of-director level of both the companies. A fresh proposal will now have to be submitted to CCI for regulatory approval.
It was declared in the month of May that Aditya Birla Nuvo Ltd (ABNL), a unit of the $28 billion Aditya Birla Group, will attain a majority stake in Pantaloon Retail, India’s largest listed retail company by revenue.
The proposed deal, which will help the Future Group’s company pare debt, is likely to be completed within 8-10 months, subject to the scheme of arrangement being finalized, due diligence, and statutory and other approvals, ABNL said in a statement.
ABNL had said that it will infuse Rs1, 600 crore in the Pantaloons department retail chain business by issuing debentures worth Rs800 crore at mutually agreed terms and taking on debt of Rs800 crore.
A CCI spokesperson however clarified that the rejection by the commission was only on technical grounds and not on the merits of the case. “The deal is yet to be approved by the boards of the two companies, so they need to come back to the commission once they approve it, and the case will be reconsidered,” the spokesperson said.
He added that the case had not been rejected on any violation of competition law.