Reliance-Future deal 3rd largest in world, clause keeps Biyani out of retail for 15 years

Last week, billionaire Mukesh Ambani's Reliance Industries announced the acquisition of Future Group for Rs 24,713 crore to bolster its fast-growing retail business. Under a non-compete clause of the Reliance-Future Group deal, Future's founder Kishore Biyani and his kin are banned from re-entering the retail space for the next 15 years, a leading Indian daily reported quoting two sources in the know about the agreement's specifics.

'There is an exception of home retailing'

Sources told the publication that as per the deal, neither Kishore Biyani nor his immediate family members can operate in any retail segment. However, there is no official confirmation regarding it yet. “There is, however, an exception, of home retailing, where Reliance has no presence so far. The deal is applicable for all existing retail businesses both online and offline,” one of the sources said. A non-compete agreement is usually between an employer and the employee in which the latter promises not to enter into any kind of competition.

Reliance buys Future Group

"Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries, 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 lumpsum aggregate consideration of Rs 24,713 crore," the company said in a statement.

Through the deal, Reliance will acquire Future Retail that owns the BigBazaar that sells everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions Ltd that operates fashion discount chain Brand Factory. While Reliance will takeover Future Consumer Ltd, which sells food, home, and personal care products, Future Group's financial and insurance business is not part of the deal.

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Future Retail operates 1,550 stores. Its flagship brands are BigBazaar, FBB and Foodhall, Easyday, Heritage Fresh and WHSmith. Future Lifestyle Fashion operates 354 stores. Investment from Reliance would help Future's founder Kishore Biyani pare debt. The deal may, however, risk Future's tie-up with the US online shopping giant Amazon, according to media reports. Biyani's group was among India's first retailers to build a large retail and consumer products business over the decades. Meanwhile, as per a recent business study by Boston Consulting Group, Reliance Retail's deal will bolster the industry's estimated worth to $1.3 trillion by 2025 from $700 billion in 2019.

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(With PTI inputs)