is now the frontrunner to acquire , owner of the listed women’s branded apparel retailer that owns brands such as W, Elleven and Aurelia, pulling ahead of in what has eventually narrowed down to a two-horse race for the company, people aware of the development told ET. Once concluded, this could well be the largest branded apparel buyout by the $60-billion aluminium-to-telecom conglomerate.
Promoters of the retailer, the New Delhi-based Pasricha family, and PE investor TA Associates together own 61.24% of the company.
Will Trigger Open Offer
They had mandated Credit Suisse to find a strategic or financial buyer. The transaction will also trigger an open offer for an additional 25% of the company. If the open offer is fully bought into, the new investor could own up to 86.24% of TCNS, for Rs 3,016 crore. The current market capitalisation of
is Rs 3,507.16 crore.
However, the promoters are seeking a significant control premium, and that is delaying the ongoing negotiations, said people in the know. Disagreements over valuations could also be a potential deal breaker, they said.
“The company keeps on evaluating various opportunities on an on-going basis and in this regard consult with various advisors,” said Amit Chand, chief financial officer, TCNS Clothing Co. “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 applicable Sebi regulations.”
An Aditya Birla spokesperson and the country head at TA Associates declined to comment. Mails sent to Falguni Nayar, CEO, Nykaa, remained unanswered.
Avendus is working with Nykaa on this transaction.
Local media reports last month said that several retailers, including
, , Aditya Birla Fashion and Nykaa, and PE firms TPG and Advent were eyeing the TCNS stake.
“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,” said the CEO at a rival retail chain that evaluated TCNS but did not bid. “The valuation demand has been a sticky point. After all, business fundamentals drive demand, and that is why there have been several stops and starts.”
Sources said there are no exclusive deals signed yet with any party. The promoters and TA Associates may retain a small stake for future upside but that’s not final yet. TA Associates bought a 40% stake in TCNS in 2016 for $140 million, but the private equity firm sold a part of its stake during the company’s initial share sale in 2018.
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