VF Corp, the $7-bn American lifestyle garment firm which owns the Lee, Wrangler and Nautica brands, is picking up 60% stake in a new joint venture with Arvind Brands, a wholly-owned subsidiary of Indian textiles major Arvind Mills.
The new company will carry out the export-import activities of the companies in India, Sri Lanka, the Reunion Islands, the Seychelles, Madagascar, Mauritius and the Maldives.
In addition, the company will engage in designing, promoting, marketing and distributing, besides wholesale trading of the companies' branded products in the region.
This opens a new avenue for Arvind Mills, which only recently converted Arvind Brands into a wholly-owned subsidiary after buying out 53.4% equity holding of ICICI Venture Funds Management in a Rs 106-crore deal last year.
Arvind Brands sells branded apparel through its own brands like Newport, Flying Machine and Ruf & Tuf and is also the Indian licencee for international brands Arrow, Lee, Wrangler and Tommy Hilfiger.
VF and Arvind have had a relationship for sometime, but that is restricted to trademark licence and technology transfer agreements VF group firms have Arvind Fashions, which takes care of the company's branded business, the second largest in the country.
The agreements allow Arvind to label and market Lee and Wrangler branded garments, especially in the denim segment.
A source told ET that the American firm will route its investment into the proposed JV through a Mauritius-based subsidiary, VF Mauritius.
He added that VF will pay a premium of Rs 169.08 on each share of Rs 10 share purchased. Sources say the new company is likely to invest into the exclusive brand outlets of Lee, Wrangler or a Nautica which would qualify for single-brand FDI.