Reliance Is Buying Big Bazaar, Future Group’s Retail Business To Become India’s #1 Retailer; Rs 27,000 Crore Is The Deal Size

At the start of July, we brought a very interesting story to you, regarding the talks of Mukesh Ambani’s Reliance Industries (RIL) to acquire Kishore Biyani’s Future Group.

Despite the deal almost coming to a close, both the companies were deliberating on the finer points of the deal.

Today, we have a follow up on that story.

RIL and Future Group Finally Reach a Common Ground

It has been reported that Biyani’s Future Group and Ambani’s RIL have finalised their deal and it has now entered the final stages.

RIL is in the final stages of buying a controlling stake in Future Group’s retail business.

The companies have supposedly reached a common accord regarding certain terms and conditions and a deal is likely to be announced soon.

In fact, the transaction took time and was delayed due to a lack of consensus over the valuation of Future Retail.

“The board members of Future have finally agreed with the final contours of the deal that was being worked out among the parties. A resolution will be passed over the next few days”, as per a source.

What has been Finalized until Now?

The deal will make RIL the number one player in brick-and-mortar space in India across categories such as fashion, groceries, and merchandise.

• RIL will take over the retail, supply-chain and the combined related businesses of Future Group.
• Biyani is likely to be left with control over the Group’s FMCG section and some other smaller group companies.
• At present, the process of negotiation includes what role Biyani would play after the transaction.
• Shares of Future Retail Ltd leapt almost 5% to Rs 100.20 on Monday, once the news kicked in.
•  The shares hit the upper-circuit and were trading up 4.6% at around 10.25 am, on Monday.

Why did the Deal take Such a Long Time?

Negotiations between Future Group and RIL began earlier this year, as one of Biyani’s holding entities defaulted on the loan payment.

Future Retail holds over 1,500 retail stores across several sectors. It also holds brands like:

• Big Bazaar,
• Ezone,
• Foodhall,
• Fashion at Big Bazaar (FBB),
• Nilgiris,
• Easyday, and
• 300 stores under brands like Central and Brand Factory.

Future Retail defaulted on a repayment sum of $500-million foreign currency bonds last week, by a total of Rs 100-crore ($14-million).

Also, the company’s market value fell 74%, totalling to Rs 10,464 crore, in just a year’s time, leading the debt to jump to Rs 12,000 crore.

Future companies did not repay the debts to banks, for nearly four months ago.