Shares of Raymond and Godrej Consumer Products (GCPL) fell 6% on the BSE in intraday trade on Friday after GCPL announced on Thursday that it would acquire the consumer goods business of Raymond’s subsidiary Raymond Consumer Care (RCCL) in an all-cash transaction of Rs 2,825 crore.

Shares of Raymond fell 6% to Rs 1,608 in intraday trade on the BSE. The stock rose 56% from Rs 1,104 on March 28 to close at Rs 1,717.35 on Thursday.

Raymond has announced the spin-off of its lifestyle business to RCCL, which will be listed as a separate entity. RCCL will operate branded textiles, apparel, and high-value shirting businesses. Also, RCCL will sell its FMCG business to GCPL for a consideration of Rs 2,825 crore (5.4 times annual sales of Rs 524 crore).

After the demerger, Raymond, which will remain publicly traded, will primarily be a real estate firm investing in denim and engineering businesses. Raymond shareholders can exchange 4 shares of RCCL for every 5 shares held.

Proceeds from the sale of the FMCG business will be used to repay debt and inject funds into the lifestyle business. With the infusion of proceeds from the sale, the lifestyle business will be able to achieve its growth targets and expand its various businesses faster.

The move to divest the lifestyle business from Raymond will leave the business net-debt-free and become a separately listed entity. RCCL will retain its condom manufacturing facility and will continue to contract production in Aurangabad, Maharashtra, for the domestic and international markets, Raymond said.

GCPL stated that the acquisition enables us to complement our business portfolio and growth strategy with underpenetrated categories that offer long-term growth.

Meanwhile, shares of GCPL fell 3.5% to Rs 920 in intraday trade on the BSE. Shares of the personal-care products company have fallen 6% over the past two sessions. It hit an all-time high of Rs 994.45 on April 24, 2023.