Reliance Industries Ltd (RIL) is approaching the purchase of Future Group’s future retail assets for Rs. 24,000 to Rs. 27,000 crore to consolidate its position in the retail sector in India, according to two people familiar with the deal details.
Those who spoke on condition of anonymity said that the estimated deal value includes the future group’s obligations that Reliance plans to absorb.
Five of the listed entities, including Future Retail Ltd, Future Consumer, Future Lifestyle Fashions, Future Supply Chain, and Future Market Networks, will be merged into Future Enterprises Ltd (FEL) before the sale of the assets, said the people who purchased anonymity.
FEL will then sell a retail asset slump to a Reliance Industries Ltd. affiliate.
The first person, who requested not to be named, said that RIL has exclusive in the deal until July 31, when you need to sign a binding agreement. He added that negotiations are underway at the moment and the deal may take time to crown.
FEL develops, owns, and leases the Group’s retail infrastructure, according to the information on the company’s website. It also owns the Group’s investments in subsidiaries and joint ventures, including insurance, textile manufacturing, the supply chain, and logistics services.
As part of the deal, RIL will get fashion and grocery retail formats from entities listed in the Future Group such as Big Bazaar, FoodHall, Nilgiris, FBB, Central and Heritage Foods, and Brand Factory, excluding clothing brands Lee Cooper and All. Overall, more than 1,700 stores across formats are expected to go to RIL. RIL will also accommodate the partnerships the Future Group has with foreign brands and retailers.
For example, Retail Retail signed a major franchise agreement with 7-Eleven Inc. To develop and operate 7-Eleven stores in India. No stores have opened yet, but business is expected to go to RIL.
The deal comes as the group of the future, founded by Kishore Bayani, has accumulated heavy debt over the years. As of September 30, 2019, the debt in the companies listed in the Future Group increased to Rs 12,778 crore from Rs 10,951 crore on March 31, 2019.
The move would be a major consolidation in the retail market in India. The graph has built sizeable organized retailing since the late 1980s. In 1991, Biyani changed his company name to Pantaloon Fashion (India) Ltd. In 2001, India opened its first Big Bazaar store.
On the other hand, Reliance Retail operates approximately 11,784 stores divided across valuable fashion, footwear, luxury fashion, grocery, jewelry, electronics, communication, etc. Reliance Retail also works as a major distributor for Jio Communication services.
In an email response to an inquiry from Mint, a Reliance Industries spokesperson said: “As a policy, we do not comment on media speculation and rumors. Our company assesses various opportunities on an ongoing basis. We have and will continue to provide the necessary disclosures in compliance with our obligations under Board regulations Indian Securities (listing requirements and disclosure requirements) for the year 2015 and our agreements with stock exchanges. “