Reliance Retail locks Future Group deal at $3.38 bn

Reliance Industries on Saturday said that its retail division will acquire Kishore Biyani-led Future Group’s retail and wholesale, and the logistics and warehousing businesses for a lump sum of $3.38 billion (Rs 24,713 crore).

While the retail and wholesale unit will be transferred to newly incorporated Reliance Retail and Fashion Lifestyle, a wholly-owned subsidiary of Reliance Retail Ventures, the logistics and warehousing unit, will be transferred to Reliance Retail Ventures.

Future Group will merge holding companies, which carry the to-be-sold businesses, into Future Enterprises. Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chains and Future Market Networks will merge into Future Enterprises, as per stock exchange filings.

Future Group will retain the manufacturing and distribution of FMCG goods and integrated fashion sourcing and manufacturing business, as well as its insurance joint ventures with Generali and NTC Mills.

Post merger, Reliance Retail and Fashion Lifestyle has proposed to invest $16.4 million (Rs 1,200 crore) for a 6.09% stake in Future Enterprises. It has also proposed to invest $54.7 million (Rs 400 crore) more for another 7.05% stake of Future Enterprises, upon conversion and payment on new equity warrants.

“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 kiranas as well as large consumer brands…,” Isha Ambani, director of Reliance Retail Ventures, said in the stock exchange filing.

The deal comes at a time when Reliance Industries has been boosting its presence in India’s retail space through the expansion of offline channels, such as Reliance Retail, and digital channels, including Reliance Jio businesses.

In May, the firm launched JioMart across 200 towns to supply fresh produce, staples, grocery, personal care, home care and baby care products through an app.

A year ago, Seattle headquartered ecommerce giant Amazon acquired an indirect stake of nearly 3.6% in Future Retail, India’s second largest brick-and-mortar retailer by revenues. In August 2019, Amazon was also set to acquire a 49% stake in Future Coupons, a promoter entity of Future Retail. 

Amazon, Future Group, and RIL did not immediately respond for comments on what happens to the former’s interest in Future’s businesses. The retail and wholesale business includes its retail brands of Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory.