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Mumbai: Reliance Industries Ltd. said it will acquire the Future Group’s retail, wholesale, logistics and warehousing units of India for 247.1 billion rupees ($ 3.4 billion), in a transaction that will further Mukesh Ambani’s ambitions to dominate the retail sector. from India.
Future Group will merge some of its remaining businesses into Future Enterprises Ltd., Reliance Retail Ventures Ltd. said in a statement Saturday. The Ambani unit will then invest 12 billion rupees to acquire around 6.1% stake in Future Enterprises, according to the statement.
The transaction with Future Group will bolster Reliance Retail, already the nation’s largest retailer by number of stores, in a sector estimated to be $ 1.3 trillion by 2025 from $ 700 billion in 2019, according to a February study from Boston Consulting Group and Retailers Association of India. The deal will also help the indebted Future Group reduce its loans.
“The strong retail brands and franchises we have built over time are in stronger hands,” said Kishore Biyani, founder of Future Group in a separate statement. “This transaction takes into account the interest of all its stakeholders, including lenders, shareholders, creditors.”
Details of the transaction
- Confidence to Invest Rs 12 Billion in Future Enterprises Preferred Stock, Acquiring a 6.1% Stake
- Confidence to also buy Rs 4 billion in convertible share warrants for 7.05% of Future Enterprises shares
After disrupting India’s telecom sector, Ambani is now pursuing its ambitions in the traditional e-commerce and retail space. Asia’s richest man is on a mission to transform his conglomerate into a consumer services giant and reduce dependence on revenue from his traditional petrochemicals and oil refining businesses.
Reliance Industries’ deal with Future Group also draws the battle lines between Ambani and Amazon.com Inc., as well as Walmart Inc., which have spent billions in a bid to dominate the world’s only market of over a billion dollars. people that it is still open. foreign firms.
Last year, Amazon agreed to buy a 49% stake in one of Future Group’s unlisted firms that allowed the American e-tailer to acquire a stake in Future Retail for between three and ten years. This transaction gave the American e-commerce giant an indirect 1.3% stake in Future Retail. It was not immediately clear what happens to Amazon’s involvement.
Also read: Amazon’s Jio and Mukesh Ambani are gearing up for an epic fight
Shopping
In January, Future Group and Amazon also signed pacts to sell products from Indian retailers on the latter’s online marketplace.
The sales will help Biyani pay off debts. The group has around 7,500 crore of interest and principal owed to bondholders this year, and 433.4 crore of the bill falls on Aug. 31, data compiled by Bloomberg shows.
One of its units was unable to pay coupons for 126.5 million rupees in two local currency notes on August 16. Future Retail Ltd., another unit, said on Monday it paid interest on its dollar bonds after missing the original from July. 22 deadline for coupon payment.
Ambani, meanwhile, has been shopping. Reliance Industries acquired a majority stake in the Netmeds digital pharmacy market for Rs 6.2 billion earlier this month. It is also in negotiations to buy or buy stakes in companies like Urban Ladder, an online furniture seller and Zivame, a lingerie manufacturer, according to people familiar with the matter.
Future Group has five main publicly traded units, including Future Consumer Ltd., which sells food, household and personal care products, and Future Lifestyle Fashions Ltd., which operates the Brand Factory fashion discount chain. Bloomberg
Also read: All that an MBA degree brings is snobbish courage, not success. Just look at Mukesh Ambani
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