The much awaited deal between Mukesh Ambani-led Reliance Retail and Kishore Biyani's Future Enterprises was finally signed on Saturday. Reliance Industries (RIL), through its subsidiary Reliance Retail Ventures Limited (RRVL), will be acquiring the retail & wholesale business and the logistics & warehousing business from the Future Group on a slump sale basis for Rs 24,713 crore. The deal is subjected to adjustments as set-out in the composite scheme of arrangement (Scheme), RIL said in a press release on Saturday.
"The above acquisition is being done as part of the Scheme in which Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises Limited (FEL)," RIL said.
As part of the agreement, the retail and wholesale business of Future Group will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL. The logistics and warehousing of Kishore Biyani-led firm will be transferred to RRVL.
Besides, RRFLL has proposes to invest Rs 1,200 crore in equity shares of FEL to acquire 6.09 per cent of post-merger equity. The company will also invest Rs 400 crore in a preferential issue of equity warrants to acquire further 7.05 per cent stake in FEL, which would be completed after conversion and payment of balance 75 per cent of the issue price.
This acquisition is subject to SEBI, CCI, NCLT, shareholders, creditors and other requisite approvals.
Commenting on the development, Isha Ambani, Director, Reliance Retail Ventures, said: "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 kiranasas well as large consumer brands. We are committed to continue providing value to our consumers across the country," Isha said.
The acquisition of the retail, wholesale and supply chain business of the Future Group complements and makes a strong strategic fit into Reliance's retail business, RIL said. This will help Reliance retail to accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times.
Future Group's portfolio composition in apparel, general merchandise and own FMCG brands will allow for a wider offering to its customers.
By Chitranjan Kumar