The Kishore Biyani-led Future Group and Heritage Group have entered into an agreement under which the former gets management control over the latter’s retail business while Heritage will get a 3.65 per cent stake in Future Retail, worth about Rs.295 crore.
Though discussions between the two were on for sometime, the contours were shared at a press meet here on Monday by Mr.Biyani and Heritage’s Director Nara Lokesh and Executive Director N. Brahmani.
The “deal is done,” the Future Group head said, adding that the retail business of Heritage “merges with us. We run the company.”
This, he explained, was in sync with Future Retail plans to expand the small format stores nationally from 700 to 4,000 over the next five years through a network of own and franchisee outlets.
Heritage Foods retail business comprises 124 stores in Hyderabad, Bengaluru and Chennai. As part of the agreement, Heritage Foods would spin off its retail, bakery, agri-sourcing and veterinary care business in a fully owned subsidiary.
Subsequently, all these businesses, except veterinary care, would be merged with Future Retail. Mr. Lokesh, whose father and Andhra Pradesh Chief Minister N. Chandrababu Naidu founded the Heritage Group in 1992, said Heritage Foods would own the 3.65 per cent shares making it the third largest non-promoter shareholder in Future Retail. “It will be part of our investments,” he said. A five-member committee was to be formed for managing the retail business of Heritage during the interim period of six months, after which Future would take charge.
