In a major development, the Mukesh Ambani-led Reliance Industries Ltd on Saturday announced that its acquisition of Kishore Biyani's Future Group's businesses for ₹24,713 crore. The acquisition includes retail and wholesale business along with its logistics and warehouses, bolstering Ambani's retail expansion. With this expansion, Reliance Retail will now have access to Future's Big Bazaar, FBB, Easyday, Central, Foodhall stores spread across India, taking on Jeff Bezos' Amazon.
"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 lumpsum aggregate consideration of INR 24,713 crore," the company said in a statement.
Market analysts estimate that with the acquisition, Reliance retail will own 1800 stores of the Future Group's brands spread across 420 cities. As per reports, the retail and wholesale business will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL, while logistics and warehousing will be transferred to RRVL directly. Furthermore, RRFLL will reportedly invest ₹1,600 crores in Future Enterprises Limited (FEL) acquiring 13.14% shares of FEL. Post-merger, FEL will retain the manufacturing and distribution of FMCG goods, allowing RRVL to takeover its units across grocery, apparel, supply chain, and consumer business. With the deal, Ambani's conglomerate will also disrupt the retail space, after his success in telecom, reducing his dependence on revenue from ist traditional petrochemicals and oil refining businesses.
Reports state that the merger deal between the two groups was expected to be closed this month prior to the moratorium ending on August 31. Apart from the Future Group having group-level debts, reports state that banks have additional exposure of ₹11,970 crores to the promoter entities of the Future Group. As a part of the deal, Reliance has reportedly asked Future Group’s vendors which include ITC and HUL, to take a haircut of around 40% on their past dues. 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.
Biyani's group was among India's first retailers to build a large retail and consumer products business over the decades. As per market reports, the company, which has been accumulating crunching debt prior to the nationwide COVID-19 lockdown, had a had debt of more than Rs 15,000 crore in March 2020. While Biyani was reportedly in talks with creditors to sell shares in many group firms, the group had also defaulted on payments of dues as high as 70% in the case of some of its subsidiaries.