The much anticipated deal between Mukesh Ambani controlled Reliance Retail and Kishore Biyani’s Future Enterprises may finally get a green signal tomorrow as the board of the later will meet on Saturday i.e.29th August to seal the deal. Most likely it would be an all cash deal that will see Reliance Retail take on Future group’s debt and liabilities, and pick up a minority stake in the latter’s FMCG arm, the Economic Times reported.
As per the deal terms mentioned in the report, the transaction is valued at approximately Rs 29,000-Rs 30,000 crore and Future Group will merge five listed units across grocery, apparel, supply chain and the consumer business into Future Enterprises Ltd (FEL), which currently houses the group’s retail back-end infrastructure. FEL will then hive off all retail assets and sell them to RIL as a single unit, the publication reported citing two unnamed sources having knowledge of the deal.
One of the sources mentioned above told the business daily. “Reliance will pay about Rs 13,000 crore to Future Group for clearing debt, another Rs 7,000 crore for its liabilities (including payments to landlords and vendors), and Rs 6,000-7,000 crore to the promoter group,” Further, Reliance will pick up 14-16% stake in Future Enterprises for Rs 3,000 crore through a preferential allotment by the latter.
Devangshu Dutta, founder of Third Eyesight, told the business daily, “This will make Reliance the market leader by a long mile, putting pressure on rivals. In telecom and digital, it is hard to displace the market leader, but in retail, higher store count doesn’t guarantee success. Retail in India is still very fragmented or local, and having more successful stores matter instead of an absolute number of outlets.”
