In yet another deal, Mukesh Ambani’s Reliance Industries Ltd on Saturday announced the acquisition of businesses of Kishore Biyani’s Future Group to add to its fast-expanding retail business and bolster e-commerce to take on the competition from Jeff Bezos’ Amazon.
The deal makes Ambani stand stronger in the global fight between Reliance Groups, Amazon, and Walmart.
Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will acquire the retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for a lump-sum of INR 24,713 crores. As per the deal, Reliance Groups will now have access to 1800 stores across Future Group’s Big Bazaar, FBB, Central, Easyday and Foodhall formats in over 420 cities throughout India.
Isha Ambani, Director of Reliance Retail commented, “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 has played an important role in the evolution of modern retail in India.” Kishore Biyani, CEO of Future Group’s said that, the transaction will take into account the interest of all its stakeholders including lenders, shareholders, creditors, suppliers, and employees giving continuity to all its businesses.
The retail and wholesale undertaking of Future Group will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL. The logistics and warehousing undertaking will be transferred to RRVL directly. After this transaction, FEL, however, will retain the manufacturing and distribution of FMCG goods and integrated fashion sourcing and manufacturing business and its insurance JVs with Generali and JVs with NTC Mills.
RRFLL has also proposed to invest ₹1,200 crores in the preferential issue of equity shares of FEL to acquire 6.09 % of post-merger equity holding; and ₹400 crores in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in RRFLL acquiring further 7.05% of FEL.
Mr. Ambani the business magnate has already rattled India’s Telecom sector after the launch of its Reliance Jio network.
Now Asia’s wealthiest man seems to have plans on transforming his syndicate into a consumer-services giant and reduce dependence on revenue from its traditional businesses of petrochemicals and oil refining.
