Shares of Arvind Fashion moved higher by 16 per cent to Rs 196.65 on the BSE in the intra-day trade on Thursday after the country’s leading casual and denim clothing manufacturer announced a divestment of the assets of ‘Unlimited’ business to V-Mart Retail in an all cash transaction for about Rs 150 crore. The company said it had decided to exit this business and to focus on growing the high-conviction focus brands.
"Arvind Lifestyle Brands Limited (ALBL), a wholly-owned subsidiary of Arvind Fashions Limited (AFL), has signed definitive agreements for strategic sale of assets of its Unlimited retail business to V-Mart Retail Ltd. in an all cash transaction,” Arvind Fashions said in a media release.
As part of the transaction, ALBL will sell assets consisting of fixed assets, lease deposits and identified inventory and other current assets of the 74 retail stores and the warehouse to V-Mart at its book value.
As per the deal, ALBL would receive cash consideration estimated at about Rs 150 crore upon the closure of transaction and thus, will fully recover the capital employed in the business. In addition, there are contingent payments to be received, based on certain milestones achieved by V-Mart over next few years for these stores, post the acquisition. The Company intends to utilise the amount so received for repayment of debt and for working capital purposes.
"This sale will help AFL achieve its objective of focusing on its 6 high conviction brands which include US Polo Assn., Tommy Hilfiger, Arrow, Flying Machine, Calvin Klein and Sephora. This also significantly completes the process of reset that AFL had embarked on, to consolidate and sharpen its portfolio as well as to strengthen its balance sheet," it said.
The completion of transaction is subject to necessary approvals and customary closing conditions.
Meanwhile, shares of V-Mart Retail traded 2 per cent higher at Rs 3,304, after hitting a intra-day high of Rs 3,319 on the BSE.
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