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Kishore Biyani’s retail behemoth Future Group on Thursday announced that it has acquired HyperCity, a 19-store network of high-end grocery and merchandise retail, for ₹655 crore from Shoppers Stop Ltd.
As part of the stock-and-cash deal, Future Retail will allot 93,10,987 shares at ₹537 each (aggregating to ₹500 crore) to existing shareholders of HyperCity Retail, while also paying cash of ₹155 crore to take over the entire equity of the supermarket chain.
The companies did not disclose how much of the debt would move from Shoppers Stop’s books to Future Retail. HyperCity’s debt has touched ₹400 crore, according to the Shoppers Stop annual report.
Incorporated in May 2004, HyperCity has 1.24 million sq ft under operation. In the term sheet published to stock exchanges on Thursday, HyperCity’s net worth was pegged at ₹11.45 crore, as of March 2017. The acquisition is expected to be completed in 3-5 months.
Per Shoppers Stop’s annual report, HyperCity reported a loss of ₹83.99 crore, on revenue of ₹1,107 crore, in FY17.
Shoppers Stop had taken an impairment of ₹36 crore last fiscal towards “diminution in value of investments in HyperCity.” It owns 51 per cent of HyperCity while the rest is held by the company’s parent, K Raheja Group.
The accumulated losses of HyperCity had amounted to ₹711.77 crore as of March 2017. The annual report said that the gestation period for turning around this division was taking longer than expected.
For Shoppers Stop, this sale removes a millstone around its neck, allowing it to focus on its traditional strengths in fashion and apparel.
As of March 2017, Big Bazaar operated 901 stores in 240 cities, with retail space of 13.8 million sqft. Future Retail reported a net profit of ₹368 crore last fiscal year.
On Thursday, Shoppers Stop shares gained 2.54 per cent on the BSE to close at ₹507.15, while Future Retail rose 0.81 per cent to end at ₹527.65.
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