Reliance Future Business Deal

Reliance to buy Future group’s retail arm for Rs 24,713 cr

Reliance Industries said on Saturday that it has agreed to acquire the retail and wholesale business and the logistics and warehousing business of Future Group in a deal valued at $3.38 billion (Rs 24,713 cr), including debt. Future group’s brands include Big Bazaar, Easyday, Nilgiris, Central, and Brand Factory.

While the widely anticipated acquisition means exit of Kishore Biyani, the founder of Future group from the industry after close to 30 years, it will consolidate Ambani’s position in the Indian retail industry which is witnessing huge investments by multinational players in the e-commerce segment such as Amazon and Walmart.

The merger also means increased competition to existing brick and mortar companies like D-Mart and Aditya Birla Fashion. Like many other store chain owners, Future Group’s business has been hit by a slowing economy and the impact of the coronavirus pandemic.

The Win-Win Deal is:

  • Reliance Retail Ven to buy Retail, Wholesale, Logistics business of Future Group.
  • RIL unit to buy businesses for Rs 24,713 crore.
  • Deal to be done via a slump sale basis.
  • RIL unit to buy Rs 1,200 crores worth of shares in FEL via pref issue.
  • RIL units to invest another Rs 400 cr in the preferential issue of FEL.
  • RIL to take over part of the Future group’s liabilities.Reliance said the acquisition is being done as part of the merger scheme in which Future Group is merging certain companies carrying on the retail businesses into Future Enterprises Limited (FEL).

As per the plan, various Future group companies such as Future Retail Limited, Future Consumers Limited, Future Supply Chain Solutions Limited Future Lifestyle Fashion Limited, Future Brands Limited, and Future Market Network Limited will first merge into Future Enterprises Limited.

Subsequently, the retail and wholesale undertaking will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL. At the same time, the logistics and warehousing undertaking will be transferred to RVVL.

Also Read: Future Retail will pay missed interest by Monday

RRFLL and RRVL will also take over certain borrowings and current liabilities and discharge the balance consideration by cash. The identified assets and Identified liabilities of the retail and wholesale undertaking would be transferred to Reliance Retail and Fashion Lifestyle Ltd as a going concern on a slump sale basis for a consideration of Rs. 5,628.33 crore. The retail and wholesale business includes Big Bazaar, FBB, Foodhall, Easyday, Nilgiris, Central, and Brand Factory.

The Merger Plan is as follows:

  • Future Enterprises to merge listed Future cos with self.
  • FEL to issue 9 shares for every 10 shares in Future Consumer.
  • FEL to issue 116 shares for every 10 shares in FLFL.
  • 10 shares of FRL to fetch 101 shares in FEL.
  • Future Supply Chain 10 shares to get 131 shares in FEL.
  • FEL will issue 18 fully paid-up equity shares of Rs 2 each to the equity shareholders of FMNL for every 10 shares of Rs 10 each held.

“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 has played an important role in the evolution of modern retail in India,” Isha Ambani, Director of Reliance Retail said.

“We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands. We are committed to continuing to provide value to our consumers across the country,” she added.

RIL said the acquisition of the retail, wholesale, and supply chain business of the Future Group complements and makes a strong strategic fit into Reliance’s retail business. This will help Reliance retail to accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times, the RIL statement said.

RRVL is a subsidiary of Reliance Industries Limited, carrying on the consumer supply chain business and consumer retail Business through its subsidiaries. RRVL reported a consolidated turnover of Rs 162,936 crore and a profit of Rs 5,448 crore for the Financial year ended March 31, 2020.

“Aa a result of this reorganization and transaction, the Future Group will achieve a holistic solution to the challenges that have been caused by Covid-19 pandemic and themacro-economic environment,” said Kishore Biyani, Group CEO, Future Group.

“This transaction takes into account the interest of all the stakeholders including lenders, shareholders, creditors, suppliers, and employee giving continuity to all its businesses,” said Kishore Biyani.

Post-transaction, FEL will retain a few manufacturing and distribution of FMCG goods apart from its insurance JVs with Generali and JVs with NTC Mills.

The Merger Plan is as follows:

  • Future Enterprises to merge listed Future cos with self.
  • FEL to issue 9 shares for every 10 shares in Future Consumer.
  • FEL to issue 116 shares for every 10 shares in FLFL.
  • 10 shares of FRL to fetch 101 shares in FEL.
  • Future Supply Chain 10 shares to get 131 shares in FEL.
  • FEL will issue 18 fully paid-up equity shares of Rs 2 each to the equity shareholders of FMNL for every 10 shares of Rs 10 each held.

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