Indian Billionaire Mukesh Ambani’s Reliance Industries ltd. on Saturday announced the acquisition of Kishore Biyani’s Future Group’s businesses for ₹24,713 crore to add to its fast expanding retail business. Reliance Industries have announced that they will be taking over Future’s retail, wholesale, logistics and warehousing assets.
“Reliance Retail Ventures Ltd, subsidiary of Reliance Industries Ltd 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 lump sum aggregate consideration of INR 24,713 crore,” the company said in a statement.
Kishore Biyani was among the first big box retailers in India, building out a large retail and consumer products business over decades. As of March, the group had 1,388 stores under the Future Retail umbrella and 348 stores under Future Lifestyle Fashions Ltd.
In building this humongous empire, Biyani Accumulated a debt of more than Rs 15,000 crore. With this deal, Reliance Retail will now have access to close to 1,800 stores across Future Group’s Big Bazaar, FBB, Easyday, Central, Foodhall formats, which are spread in over 420 cities in India.
“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. 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 continue providing value to our consumers across the country,” said Isha Ambani.
The whole deal is structured in three steps. In the first step, Kishore Biyani will merge Future Retail Ltd., Future Lifestyle Fashions Ltd., Future Consumer Ltd., Future Supply Chain Solutions Ltd. and Future Market Networks Ltd. into Future Enterprises.
- Futures Enterprises to issue nine shares to Future Consumer shareholders for every 10 shares held by them.
- Future Enterprises will issue 116 shares to shareholders of Future Lifestyle Fashions for every 10 shares held by them.
- Future Enterprises will issue 18 shares to shareholders of Future Market Networks for every 10 shares held by them.
- Future Enterprises will issue 101 shares to shareholders of Future Retail Ltd. for every 10 shares held by them.
- Future Enterprises will issue 131 shares to shareholders of Future Supply Chain for every 10 shares held by them.
In Part two of the deal, the retail and wholesale undertaking of Future Group will be taken over by Reliance Retail and Fashion Lifestyle Limited, a wholly-owned subsidiary of Reliance Retail.The logistics and warehousing undertaking will be transferred to Reliance Retail directly. Reliance Retail will also take over certain borrowings and current liabilities as part of the business, and pay the rest in cash.
As part of the third step, Reliance Retail and Fashion Lifestyle will invest Rs 1,200 crore in a preferential issue of shares by FEL for a 6.09% stake. Reliance will also invest Rs 400 crore towards FEL warrants. On conversion, the investment will amount to Rs 1,600 and result in an additional stake of 7.05%.
“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”, said Kishore Biyani, Group CEO, Future Group.
A total of Rs 5,653.33 crore will be transferred towards the retail, wholesale, logistics and warehousing assets. A senior executive aware of the deal on condition of anonymity revealed that the slump sale will also include a Rs 900 crore payment to FEL on account of certain debt and vendor liabilities. The deal concludes at a transfer of approximately Rs 18,000 crore debt for the Future group.