Reliance Retail acquires Kishore Biyani’s Future Group for ₹25,000 crore in a ‘slump sale’

BI India/BCCL
  • Kishore Biyani gives up his retail empire to Mukesh Ambani – says its now in ‘stronger hands’
  • The Mukesh Ambani-owned company will pay off the debts of Future Group and pay the remaining to Biyani in cash.
  • Aside from Future’s 1500 retail stores, Reliance will also get control of the logistics and warehousing business.
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After months of wait, the cat is finally out of the bag. Mukesh Ambani has bought Kishore Biyani’s Future Retail for ₹24,713 crore.

With the acquisition, Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chains and Future Market Networks will merge into Future Enterprises Limited (FEL).

Reliance Retail will now own all of Future Enterprises’ stores by way of a ‘slump sale’ – Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory. The deal will also see Reliance take over Future’s logistics and warehouse.

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Reliance will now take over the borrowings and liabilities of Biyani and will “discharge the balance consideration by way of cash”. “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

“We are pleased that our strong retail franchise and brands, that we have created over time, are going in stronger hands and will continue to grow and delight Indian shoppers”, added Kishore Biyani.

According to Reliance's official statement, the company also proposes to invest
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(a)₹1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 % of post-merger equity; and
(b)₹400 crore 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.

Here’s a look at the market cap of all Future Group listed companies as of market close on August 28, 2020.

Future Enterprises₹998 crore
Future Retail₹7,333.29 crore
Future Supply₹662.86 crore
Future Lifestyle Fashions₹2927.5 crore
Future Consumer₹2205.43 crore
Future Market Networks₹153.36 crore

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The group has debts of over $2 billion. And while Biyani and his family hold a 33.5% stake in Future Group, almost all of it has been pledged to lenders.

CompanyPercentage of pledged stake
Future Lifestyle99.78%
Future Supply (FSCL) 97.62%
Future Consumer92.97%

"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," said Isha Ambani, Director, Reliance Retail Ventures Limited in a statement.

Reliance said that the acquisition will accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times.
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SEE ALSO:

Once India’s ‘retail king’, Future Retail promoter Kishore Biyani is straddling high debt, coronavirus and negative ratings⁠⁠— and nearly his entire stake is already pledged

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