Mukesh Ambani-controlled Reliance Industries Ltd (RIL) is in late-stage talks with Kishore Biyani-led Future Group to buy a controlling stake in its retail business. The companies have supposedly reached a common accord regarding certain terms and conditions and a deal is likely to be announced soon.
The deal will make RIL the number one player in brick-and-mortar space in India across categories such as fashion, groceries, and merchandise. The transaction will be funded through a mix of share-swap and cash.
"(Reliance and Future) have ironed out their differences over certain terms and conditions and a deal will be announced soon," the Times of India (TOI) reported, citing sources.
Shares of Future Retail Ltd leapt almost 5% to Rs 100.20 on Monday following the news report. The shares hit the upper-circuit and were trading up 4.6% at around 10.25 am (on Monday).
Future Retail operates over 1,500 stores in India and owns several supermarket brands, comprising budget department and grocery chain Big Bazaar, Ezone, Fashion at Big Bazaar (FBB), Foodhall and Easyday. Whereas, Future Lifestyle has 300 stores under brands such as Central and Brand Factory.
Amongst several important modalities of the deal being worked out presently, the negotiation process also comprises the role of Biyani post the transaction.
"The board members of Future have finally agreed with the final contours of the deal that was being worked out among the parties. A resolution will be passed over the next few days," the publication quoted a person familiar with the development as saying.
The source further added that Biyani is likely to retain the FMCG and some other smaller group firms. The transaction will be funded through a mix of share-swap and cash.
According to the deal, Biyani will relinquish control over all businesses under the Future Retail basket (comprising FBB, Big Bazaar, Food Hall and Central), Future Lifestyle Ltd, and Future Supply Chain Solutions.
All three entities will be merged and the combined business will be acquired by RIL. Biyani will be left with control of Future Group's FMCG business and some other smaller group companies.
Negotiations on the deal began earlier this year as one of Biyani's holding entities defaulted on the loan payment.
According to several news reports earlier, Biyani, once the poster boy of India's retail sector, held several discussions with many other potential investors as well.
Various big players like US-based retail giant Amazon had shown interest in Future Group, but a deal with RIL offered a thorough solution to Biyani's debt issues.