The Tata group (Tata Sons Private Limited) is understood to be in talks with the promoters and shareholders of Fabindia (Fabindia Limited) for a stake or outright buy of the ethnic apparel business, sources said. Talks are still going on, but sources indicate that the acquisition will likely value it lower than the $2.5 billion pegged by the clothing company?s aborted initial public offering. The deal, if it goes through, could be the largest in the segment, after Aditya Birla Fashion and Retail Limited?s acquisition of a controlling stake in TCNS Clothing last year.

For the Tatas, this will be a strategic addition to their portfolio in the ethnic wear space. Retail arm Trent (Trent Limited (BSE:500251)) sells apparel under Westside, Zudio and Utsa brand names. Also, the ethos of Fabindia, that makes its products from traditional techniques, and hand-woven fabrics that are sustainably sourced, resonates with that of the Tata group.

The Tata group and Trent declined comment. A spokesman for Fabindia denied that any talks were on.