Reliance Retail Ventures Ltd. (RRVL), a subsidiary of Reliance Industries Ltd., has announced the acquisition of the retail and wholesale, and logistics and warehousing businesses of the Future Group, on a slump sale basis, for a lump sum of ₹24,713 crore.
The acquisition is being done as part of the scheme in which Future Group is merging certain companies carrying on the above businesses into Future Enterprises Ltd. (FEL).
The retail and wholesale undertaking of Future Group is being transferred to Reliance Retail and Fashion Lifestyle Ltd. (RRFLL), a wholly owned subsidiary of RRVL, while the logistics and warehousing undertaking is being transferred to RRVL.
Besides, RRFLL will also invest ₹1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09% of post-merger equity, and ₹400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in RRFLL acquiring a further 7.05% of FEL.
“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,” Isha Ambani, director, RRVL, said in a statement on Saturday.
Analysts said the deal had happened at a time when Future Group was facing cash flow and debt servicing issues. While lenders will get back their money, vendors and employees will breathe easy in these uncertain times, they added.
Future Group said it would undertake a reorganisation of its businesses in which key group companies, including Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chains and Future Market Networks will merge into FEL.
The brands which will come to Reliance include Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory.
RRFLL and RRVL will take over certain borrowings and current liabilities related to the logistics and warehousing business and discharge the balance consideration by way of cash.
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.