Billionaire Mukesh Ambani’s Reliance Industries on Saturday announced acquisition of Future Group for Rs 24,713 crore to bolster its fast-growing retail business.
“Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries, will acquire the retail and wholesale business and therefore the logistics and warehousing business from the longer term Group as going concerns on a slump sale basis for lumpsum aggregate consideration of Rs 24,713 crore,” the corporate said during a statement.
Through the deal, Reliance will acquire Future Retail that owns the BigBazaar that sells everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions Ltd that operates fashion chain Brand Factory.
While Reliance will takeover Future Consumer Ltd, which sells food, home and private care products, Future Group’s financial and insurance business isn’t a part of the deal.
The oil-to-chemical conglomerate’s retail venture is India’s largest offline retail company. Despite its recent online rollout, the corporate is keen to expand its offline presence. Future may be a good slot in Reliance’s retail that helps it expand its offline retail presence and would see further improvement in margins thanks to improving scale.
While Ambani’s firm has bought out all of the promoter stake in Future Retail and Future Lifestyle Fashions – the 2 firms that hold the longer term Group business, it had been not immediately clear what happens to Amazon’s holding within the Future.
In August last year, Seattle-based Amazon took an indirect stake of 1.3 per cent in Future Retail as a results of purchasing 49 per cent of Future Coupons Ltd. This investment allows it to shop for into Future Retail after a period of between 3 and 10 years.
That partnership was deepened in January when Amazon became the authorized online sales channel for Future Retail’s stores that sell everything from groceries to cosmetics and apparel.
Reliance also as a separate statement by Future was silent if the deal triggers an open offer to accumulate 26 per cent shareholding from minority shareholders of Future Enterprises Ltd.
Future Group said it “sell by way of a slump sale the retail and wholesale business that has key formats like Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory to Reliance Retail and Fashion Lifestyle Ltd (RRFLL), a wholly-owned subsidiary of Reliance Retail Ventures Ltd.”
It will also sell the logistics and warehouse business to RRVL by way of a slump sale.
“RRFLL and RRVL will take over certain borrowings and current liabilities associated with the business and discharge the balance consideration by way of money ,” the statement said.