Aditya Birla Nuvo is set to rework its deal for a controlling stake in Pantaloons after the

latter's June quarter business fell below estimates, leading to a slight valuation drop, said
sources briefed on the matter.
Billionaire Kumar Mangalam Birla had announced plans to buy a 50.1% stake in Pantaloons
in May this year for Rs 800 crore in cash while taking on a similar quantum of debt. The
deal entailed Kishore Biyani-controlled Pantaloon Retail India (PRIL), with diversified
retailing interests, demerging lifestyle stores into a separate entity. Aditya Birla Nuvo
planned subscribing Rs 800 crore debentures of PRIL, to be converted into equity of the
demerged business, besides assuming the debt.
This would have pegged enterprise value of Pantaloons stores at Rs 3,200 crore, almost two
times topline revenue and 13 times EBITDA, which some analysts tracking the sector argued
was on the higher side. The structuring would have seen Birla acquiring over 25% direct
stake and making a mandatory open offer for additional 26% leading to majority control.
Birla was discussing valuation changes with Biyanis before finalizing the scheme of
arrangement, but both remain committed to the transaction, said at least two sources
involved with the process. One source mentioned earlier said reworking followed a more
than anticipated decline in first quarter numbers, and the valuation dip would be between 5
to 10%. "The valuation metrics (of 13 times EBITDA) was unlikely to change," this source
claimed.
Biyanis had given Rs 200 crore EBITDA guidance for Pantaloons' demerged entity when the
deal was announced, but the business is said to have missed the estimates after PRIL posted
78.6% decline in profits in April to June quarter. A second source said it was early to talk
about final valuation as "give and take discussions" were still on. There could be clarity
emerging within a fortnight, he added. A valuation downside would fetch Birla's debentures
more stake than originally planned.
When contacted, spokespersons for Aditya Birla Group and PRIL did not offer comments.
The Biyani family will retain 25% interest in the stores business, which they set up 15 years
ago. Pantaloons is a lifestyle retail network covering 35 cities complementing Birla's
formidable fashion brands portfolio of Louis Philippe, Van Heusen, Allen Solly and Peter
England.
The Competition Commission of India (CCI) has given its green signal to the takeover of
Future group's Pantaloon brand business by Aditya Birla Nuvo.
"... The Commission is of the opinion that the proposed combination is not likely to have an
appreciable adverse effect on competition in India," the fair trade regulator's order, dated
December 21, said. This order has come on an application filed on October 8.
Aditya Birla Nuvo, part of Kumar Mangalam Birla-led group, through a subsidiary has
proposed to acquire a majority of Pantaloon format business from Kishore Biyani-led
Future Group. CCI had in August termed as invalid an application seeking nod for this

takeover deal as the final deal was yet to be approved by the boards of the companies at that
time.
In late April, Future Group had said that Aditya Birla Nuvo would infuse Rs 1,600 crore into
its flagship 'Pantaloon' and would acquire a majority stake in the apparel store chain, which
would be later demerged to be listed as a separate entity.