Reliance Acquires 200 Big Bazaar & Other Future Stores; Will Protect Jobs & Run These Stores
Reliance will take over at least 200 Future Retail stores after Future Retail failed to make lease payments for them to Reliance.
Reliance transferred the leases of some stores to its name and sublet them to Future to operate the stores.
It will now run and rebrand about 200 outlets that would otherwise be closed but the balance stores will continue to be run by FRL, ensuring that its operating losses are reduced and it can continue as a going concern.
This is a bold move considering the acquisition deal announced in 2020 is stuck in a legal battle with Amazon.
No Job Losses
Over 400 Big Bazaar stores will be rebranded as Reliance Retail.
It will re-employ Future Retail staff working at these locations and bring them under its payroll.
At least 30,000 such employees are being given offer letters and over the next few days Reliance will begin the rebranding.
In August 2020, Reliance Industries signed an agreement with Future Group to purchase the latter’s retail assets for Rs 24,731 crore.
Financial And Legal Struggles
The deal got mired in a legal conflict when Amazon objected to it.
Already cash-strapped, Future Group has been defaulting on payments to lenders and struggling to keep its stores open.
It has also defaulted in payment of dues to the owners of the leased premises.
Consequently, many have initiated termination of the lease agreements for repossession of the premises.
Reliance has stepped in at a crucial time.
Reliance To The Rescue
Had the lease expired, Big Bazaar would have to be shut down, destroying the value of Future Retail and lenders would have dragged the company to insolvency.
Reliance’s entry will help the company protect its value since it will take over the lease and further sub-lease all these premises back to FRL so that its business could continue.
It has also provided working capital support as well as inventory support to Future Group’s company.
Future Group’s 19 companies operating in retail, wholesale, logistics and warehousing would be consolidated into one entity — FEL — and then transferred to Reliance.