After months of negotiation, Reliance Retail and Fashion Lifestyle (RRFL), the retail arm of Mukesh Ambani-led Reliance Industries is acquiring the retail and wholesale business of Kishore Biyani’s Future Enterprises. This includes key formats such as Big Bazaar, FBB, Foodhall, Easyday, Nilgiris, Central and Brand Factory. Future Group will also sell the logistics and warehouse business to Reliance Retail Ventures Limited (RRVL) by way of a slump sale.
Future Group’s retail & wholesale business and the logistics & warehousing business will be sold to Reliance Retail at a lumpsum aggregate amount of Rs 24,713 crore.
RRFLL and RRVL will take over certain borrowings and current liabilities related to the business and discharge the balance consideration by way of cash. Reliance Retail and Fashion Lifestyle is a wholly owned subsidiary of RRVL.
Future Group also announced a major reorganisation of its businesses in which the key group companies including Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chains and Future Market Networks will merge into Future Enterprises Limited (FEL).
As part of the deal, RRFL will additionally also invest Rs 1,200 crore in the preferential issue of equity shares of Future Enterprises for a 6.09% stake, and Rs 400 crore in warrants convertible into equity shares, which when converted upon payment of balance 75% consideration will result in RRFLL acquiring a further 7.05% stake.
This means that post the completion of the deal, Reliance Retail will hold 13.14% in Future Enterprises.
“As a result of this reorganisation and transaction, Future Group will achieve a holistic solution to the challenges that have been caused by Covid and the macro economic environment. This transaction takes into account the interest of all its stakeholders including lenders, shareholders, creditors, suppliers and employees giving continuity to all its businesses,” said Kishore Biyani, Group CEO, Future Group.
After this transaction, FEL will retain the manufacturing and distribution of FMCG goods and integrated fashion sourcing and manufacturing business and its insurance JVs (joint ventures) with Generali and JVs with NTC Mills.
Kishore Biyani is known as the pioneer of modern retail, having built the highly successful large-format retail chain Big Bazaar. This would be the second time that Biyani has had to sell off businesses to pare down debt. Eight years ago, he sold his apparel store business Pantaloons to Aditya Birla group when the company saw its debt mounting. Kishore Biyani has been looking to sell company assets to pare down debt, which has ballooned to nearly Rs 12,800 crore.
Isha Ambani, Director, Reliance Retail Ventures Limited, 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 kiranas as well as large consumer brands. We are committed to continue providing value to our consumers across the country."