CCI rejected the application seeking approval for the proposed takeover of Pantaloon by Aditya Birla Nuvo saying the final deal was yet to be approved by the boards of these companies

New Delhi: The Competition Commission of India (CCI) has rejected an application seeking its approval for takeover of Future group's Pantaloon brand business by Aditya Birla Nuvo, as the final deal was yet to be approved by the boards of the concerned companies, reports PTI.

Aditya Birla Nuvo Ltd, part of Kumar Mangalam Birla-led group, through a subsidiary has proposed to acquire a majority Pantaloon format business from Kishore Biyani-led Future group and the concerned parties had sought clearance from the Competition Commission for the deal on 16th July.

In its order dated 14 August 2012, which was posted on its website yesterday, CCI said that the application mentions about "the scheme including the proposal of demerger and merger" being yet to be approved by their boards of the concerned parties.

Both entities, according to the Commission, sought approval based on their Memorandum of Understanding (MoU) for the proposed deal.

As per the application, the companies in discussions are yet to finalise the exact scope of the assets to be acquired and the share entitlement ratio.

Further, the the terms of the proposed transaction are subject to the agreement by the companies in the scheme and other definitive documents that are to be executed, the order said.

"It is also observed from the terms and conditions in the MoU, that the said MoU is an interim arrangement since it will terminate immediately on execution of the implementation agreement or if the scheme does not get approval from the board of directors of the respective parties," it noted.

In late April, Future Group had said that Aditya Birla Nuvo would infuse Rs1,600 crore into its flagship 'Pantaloon' and would acquire a majority stake in the store chain, which would be later demerged to be listed as a separate entity.

As a part of the deal between the two companies, the Pantaloon format would be demerged from PRIL. .

The group's flagship firm, Pantaloon Retail India Ltd (PRIL) currently operates the 'Pantaloon' chain of fashion apparel and accessories stores.

As part of the proposed transaction, Aditya Birla Nuvo Ltd (ABNL) would subscribe to debentures amounting to Rs 800 crore issued by PRIL and on completion of the demerger process, the debentures would convert into equity in the demerged entity of the Pantaloon format.

Further, ABNL would take care of Rs800 crore debt of Pantaloon

In April, ABNL had said that it would also make an open offer of a minimum 26 per cent to the shareholders of the resulting entity.

The Commission said the notice, jointly submitted by the concerned companies, for the proposed deal was given pursuant to the MoU execution while awaiting the final decision from their respective boards.

"Considering the facts on record and the information provided in the notice jointly given by the parties (companies) for the proposed combination, the Commission hereby decides that the notice given by the parties is not a valid notice...," the order said.

The notice seeking approval for the deal was jointly moved by ABNL, Peter England Fashions and Retail Ltd (PEFRL), Indigold Trade and Services Ltd (ITSL), PRIL and Future Value Fashion Retail Ltd (FVFRL).