Reliance Retail acquires Future Group's retail & warehouse businesses for Rs 24,713 crore

In a major development, Mukesh Ambani-led Reliance Industries Ltd on Saturday announced that its acquisition of Kishore Biyani's Future Group's businesses for ₹24,713 crore. 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 spre across India, taking on Jeff Bezos' Amazon.

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Reliance retail acquires Future group

"Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will acquire retail and wholesale business and logistics and warehousing business from Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of INR 24,713 crore," company said in a statement.

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Reliance's retail expansion

Market analysts estimate that with acquisition, Reliance retail will own 1800 stores of Future Group's brands spre across 420 cities. As per reports, 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. Furrmore, RRFLL will reportedly invest ₹1,600 crores in  Future Enterprises Limited (FEL) acquiring 13.14% shares of FEL. Post-merger, FEL will retain manufacturing and distribution of FMCG goods, allowing RRVL to takeover its units across grocery, apparel, supply chain, and consumer business. With deal, Ambani's conglomerate will also disrupt retail space, after his success in telecom, reducing his dependence on revenue from ist tritional petrochemicals and oil refining businesses.

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Future groups' debt woes

Reports state that merger deal between two groups was expected to be closed this month prior to moratorium ending on August 31. Apart from Future Group having group-level debts, reports state that banks have ditional exposure of ₹11,970 crores to promoter entities of Future Group. As a part of deal, Reliance has reportedly asked Future Group’s vendors which include ITC and HUL, to take a haircut of around 40% on ir past dues. As per a recent business study by Boston Consulting Group, Reliance Retail's deal will bolster industry's estimated worth to $1.3 trillion by 2025 from $700 billion in 2019.

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Biyani's group was among India's first retailers to build a large retail and consumer products business over deces. As per market reports, company, which has been accumulating crunching debt prior to nationwide COVID-19 lockdown, h a h 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, group h also defaulted on payments of dues as high as 70% in case of some of its subsidiaries.