Reliance Industries Buy’s Future Group for Rs. 24,713 Cr

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Billionaire Mukesh Ambani’s Reliance Industries on Saturday announced the acquisition of Future Group for Rs 24,713 crore to bolster its fast-growing retail business, reported India Today.

According to a statement, “Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries, will acquire the retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of Rs 24,713 crore.”

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 discount chain Brand Factory.

While Reliance will take over Future Consumer Ltd, which sells food, home and personal care products, Future Group’s financial and insurance business is not part of the deal, the statement said.

The oil-to-chemical conglomerate’s retail venture is India’s largest offline retail company. Despite its recent online rollout, the company is keen to expand its offline presence. Future is a good fit in Reliance’s retail that helps it expand its offline retail presence and would see further improvement in margins due to improving scale.

While Ambani’s firm has bought out all of the promoter stake in Future Retail and Future Lifestyle Fashions – the two firms that hold the Future Group business, it was not immediately clear what happens to Amazon’s holding in the Future.

In August last year, Seattle-based Amazon took an indirect stake of 1.3 per cent in Future Retail as a result of purchasing 49 per cent of Future Coupons Ltd. This investment allows it to buy 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 as well as a separate statement by Future was silent if the deal triggers an open offer to acquire 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 includes key formats such as 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 related to the business and discharge the balance consideration by way of cash,” the statement said.

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.

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