Deal done: Burdened with debt, Kishore Biyani sells Big Bazaar to Reliance

Reliance Retail, which has 11,806 stores in 7,000 cities nationwide, previously said store expansion remained a “push” for the company.

Exploited to the hilt and struggling to meet repayments to lenders, Indian retail poster boy Kishore Biyani capitulated on Saturday, selling his Future Group to Reliance Industries. In a sell-off deal worth Rs 24,713 crore, RIL acquired the wholesale, retail logistics and warehousing businesses of Future Group.

The agreement gives RIL access to Future Retail’s extensive network of hypermarkets and supermarkets, including the company’s flagship outlets, the Big Bazaar. The retail business also spans the company’s chain of electronics stores in addition to its portfolio of lifestyle stores, Central and Brand Factory. Future Retail has a footprint spanning over 1,500 stores in over 400 cities and towns across the country.

Reliance Retail, which has 11,806 stores in 7,000 cities nationwide, previously said store expansion remained a “push” for the company. Besides strengthening the company’s footprint, the transaction is also expected to add significantly to the offerings of JioMart which plans to expand beyond grocery.

As part of the agreement, the Retail & Wholesale business is transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly owned subsidiary of Reliance Retail Ventures (RRVL). The logistics and warehousing business is transferred to RRVL.

RRFLL is also proposing to invest Rs 1,200 crore in preferred capital stock issue of FEL (Future Enterprises Ltd) to acquire 6.09% post-merger shares and Rs 400 crore in preferential bond issue which, upon conversion and payment of the balance 75% of the issue price, will result in the acquisition by RRFLL of an additional 7.05% of FEL.

According to rating agency ICRA, the debt of listed companies of Future Group fell to Rs 12,778 crore as of September 30, 2019, from Rs 10,951 crore as of March 31, 2019. Net profit of Future Retail fell to Rs 164, 56 crore on a consolidated basis in Q3FY20 of Rs 197.60 crore in the period a year ago. Operating revenue decreased to Rs 5,193.19 crore in Q3FY20 from Rs 5,368.46 crore in Q3FY19.

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