Reliance Retail Ventures Ltd (RRVL), a subsidiary of Mukesh Ambani-controlled Reliance Industries Ltd (RIL), has acquired Future Group’s retail and wholesale business, and logistics and warehousing business for ₹24,713 crore.
The acquisition is as a going concern on a slump sale basis, RRVL said in a statement.
The acquisition is being done as a part of the scheme in which Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises Limited (FEL).
As part of the deal, the retail and wholesale undertaking businesses are being transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL.
Further, the logistics and warehousing undertaking is being transferred to RRVL, and RRFLL also proposes to invest about ₹1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 per cent of post-merger equity.
Another ₹400 crore would be invested in a preferential issue of equity warrants which, upon conversion and payment of balance 75 per cent of the issue price, will result in RRFLL acquiring another 7.05 per cent of FEL.
"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,” Isha Ambani, Director at RRVL said.
“We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands. We are committed to continue providing value to our consumers across the country," she added.
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. 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, the statement said.
Future Group’s portfolio composition in apparel, general merchandise and own FMCG brands will allow for a wider offering to its customers.
This acquisition is subject to regulatory approvals.
JM Financial was the advisor to Future Group.
According to sources close to the deal, RIL’s acquisition will be beneficial to the overall retail ecosystem as it will not result in any jobs losses, and the assets of banks will not deteriorate. Further, it would also provide a new lease of life to suppliers and vendors, many of them small and medium enterprises.