Reliance to acquire Future Group’s retail, wholesale, logistics business for ₹24,713 crore

Big Bazaar, Central, fbb, Nirgiris among other brands & assets to come under Reliance Retail.

Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries Limited., has announced the acquisition of the retail and wholesale and the logistics and warehousing businesses of the Future Group, on a slump sale basis, for a lumpsum of ₹24,713 crore. The deal is subject to adjustments as set-out in the composite scheme of arrangement.

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The acquisition is being done as part of the scheme in which Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises Limted (FEL).

The retail and wholesale undertaking of Future Group is being transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL, while the logistics and warehousing undertaking is being transferred to RRVL.

Besides, RRFLL will also invest ₹1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09% of post-merger equity, and ₹400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in RRFLL acquiring a further 7.05% of FEL.

“With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which have played an important role in the evolution of modern retail in India,” Isha Ambani, director, Reliance Retail Ventures Ltd., said.

Reliance Retail said the acquisition of the retail, wholesale and supply chain business of the Future Group complements and makes a strong strategic fit into its business.

Future Group’s portfolio composition in apparel, general merchandise and own FMCG brands will allow for a wider offering to its customers, it said.

Analysts said the deal had happened at a time when Future Group was facing cash flow and debt servicing issues. While the lenders will get back their money, the vendors and employees will breathe easy in these uncertain times.

Future Group said it would undertake a major reorganisation of its businesses in which the key group companies including Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chains and Future Market Networks will merge into Future Enterprises Limited (FEL).

The formats which will come to Reliance include Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory.

RRFLL and RRVL will take over certain borrowings and current liabilities related to the logistics & warehousing business and discharge the balance consideration by way of cash.

After this transaction, FEL will retain the manufacturing and distribution of FMCG goods and integrated fashion sourcing and manufacturing business and its insurance JVs with Generali and JVs with NTC Mills.

This will be achieved by way of a composite scheme and will require the requisite regulatory approvals and consent of shareholders and lenders.

“As a result of this reorganisation and transaction, Future Group will achieve a holistic solution to the challenges that have been caused by Covid and the macro economic environment. This transaction takes into account the interest of all its stakeholders including lenders, shareholders, creditors, suppliers and employees giving continuity to all its businesses,” Future Group CEO Kishore Biyani said.  “We are pleased that our strong retail franchise and brands, that we have created over time, are going in stronger hands and will continue to grow and delight Indian shoppers.”

Post this exercise, he said, FEL will emerge strong with businesses in manufacturing and distribution of FMCG products and integrated fashion sourcing and merchandising. These businesses will further benefit from supply agreement with RRFLL.

Future Group said, “This deal will also enable FEL to focus on the creation of new age brands in the FMCG and fashion space and expand its reach.” The transaction will help FEL to expand with a focused business model and a stronger balance sheet, it added.

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