India’s largest private-sector company, Reliance Industries has reportedly acquired retail, wholesale, logistics and warehousing businesses of the Kishore Biyani-led Future Group for $3.38 billion.
The oil-to-telecoms giant was in advanced discussions to acquire these businesses from the debt-laden Future Group. The Mukesh Ambani-promoted venture will carry out the transaction through its subsidiary Reliance Retail Ventures Limited (RRVL).
The all-cash deal which got necessary approvals following a board meeting of Future Enterprises Limited (FEL) yesterday has been carried out on a “slump sale” basis, according to Reliance company officials. A “slump sale” is the transfer of undertakings through the sale for a lump sum amount without values being assigned to individual assets and liabilities.
As a part of the acquisition, the retail and wholesale business of Future Group will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL. While its logistics and warehousing project will be transferred to RRVL directly.
The deal will boost Reliance’s retail presence and further its e-commerce ambitions to leverage the Jio mobile phone service’s subscriber base to compete with existing market leaders Amazon and Flipkart.
Reliance Retail already runs several retail formats in grocery, electronics and apparel. Some of the big Future Group retail brands that it will now control include Big Bazaar, Fashion at Big Bazaar, Easy Day, Foodhall, and Brand Factory.
“As a result of this reorganization and transaction, Future Group will achieve a holistic solution to the challenges that have been caused by COVID and the macroeconomic 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.”
The Future Group will, however, retain the manufacturing and distribution of FMCG goods, integrated fashion sourcing and manufacturing business, its insurance joint ventures with Generali, and joint ventures with NTC Mills.