Shares of TCNS Clothing tumbled after the company said Aditya Birla Fashion & Retail (ABFRL) would acquire a controlling stake in the company and launch a public offer to acquire more shares.

ABFRL, which operates Pantaloons, has agreed to acquire a 51% stake in women’s branded clothing company TCNS Clothing for Rs 165 crore. TCNS Clothing owns popular national brands such as W, Aurelia, Wishful, Folksong, Elleven, etc.

ABFRL also plans to make a conditional public offer to acquire up to 29% stake from public shareholders at Rs 503 per share and the remaining shares from founder promoters to achieve an overall 51% shareholding in TCNS. This makes it one of the biggest deals in the Indian fashion industry.

TCNS Clothing plunged 17.71% to Rs 428.55 as of 9:20 am following the announcement. Meanwhile, shares of ABFRL rose 1.77% to Rs 218.

The companies claim the acquisition aligns with ABFRL’s goal of creating a comprehensive portfolio of fashion products across different consumer segments and price points.

Upon completion of the 51% acquisition, TCNS will be merged with ABFRL under the merger plan, with public shareholders of TCNS receiving 11 shares of ABFRL for every 6 shares of TCNS held.

This is where shareholders feel shortchanged and unhappy.

As of Friday, TCNS Clothing closed at Rs 514 per share. Six shares at that price mean Rs 3,084. On the other hand, 11 shares of ABFRL are valued at Rs 2,353.

This led to a massive sell-off in TCNS Clothing stock. Shareholders of ABFRL, on the other hand, would be in a better position. TCNS will be a great addition to the company as the acquisition comes at a time when the company is aggressively expanding its portfolio of ethnic and occasion apparel.

One concern analysts pointed to, however, is pressure on financial and earnings ratios, which are already feeling the pinch of aggressive expansion.