Venkatesh Iyer
MUMBAI, August 30: Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries Ltd. (RIL) has announced the acquiring of the Retail and Wholesale Business alongside the Logistics and Warehousing Business from the longer-term Group for Rs. 24,713 crores.
The acquisition is subject to approvals from Security and Exchange Board of India (SEBI), Competition Commission of India (CCI), National Company Law Tribunal (NCLT), Creditors and Shareholders.
The deal will help Reliance Retail (RR) access over 1,800 Future Retail stores in India. As a part of the acquisition barring two apparel brands ALL and Lee Cooper, RIL will acquire the Fashion and, Grocery retail formats from Future Group listed entities like Big Bazaar, FoodHall, Nilgiris, FBB, Central, Heritage Foods and Brand Factory.
With the acquisition, Mukesh Ambani’s dream of realizing RR as a global Indian retail company seems to have moved another step forward and ensure RIL remains an undisputed leader in India’s retail market space.
It also signals the end of Kishore Biyani’s rein, a once upon a time retail king who in 2007, had written and published a book “It happened in India” detailing how Pantaloons, Big Bazaar and Central is a successful brand. Later the book went on to become a much-spoken topic of dialogue in B Schools. Now with the sale, it will again become another discussion on how competition, not adapting to changes and the debt trap can bring a largely successful corporate down.
RRVL will acquire the logistics and warehousing enterprise, and RRFLL a, subsidiary of RRVL will acquire the Future Group Retail and Wholesale business.
Speaking to Revoi.in., Manan Shah, CA Partner Foresight School, gave a detail account of the investors expected to benefit from the takeover with the stocks of Future group companies being likely to open on upper circuits on Monday.
He said the deal would not only benefit both the corporates but also the shareholders. In the long-term, the important recipient would be Reliance Retail, a subsidiary of Reliance Industries. “Retail as a sector gets its valuation from its ability to generate sales, wherever we value retail firms, we first glance at the price to sales ratio. With the addition of the future group, sales of Reliance retail will increase and can have a tremendous effect on the value of Reliance industries,” he added.
In a media release, the Future Group said it was merging certain companies carrying on the aforesaid businesses into Future Enterprises Ltd (FEL).
The Future Group has five listed companies that sell Food, Home and Personal care products apart from Brand Factory a, fashion discount chain.
The share swap deal details are as under:
Shareholders holding 10 shares of Future Consumer (FC) will get 9, shares of FEL valuing the future Consumer stock price at Rs 18, a 57% premium compared to its Saturday price of Rs. 11.5/-.
Shareholders holding 10 shares of Future Lifestyle Fashions (FLL) will get 116 shares of FEL valuing Rs. 232/- per share, a 60% premium compared to its Saturday stock price of Rs. 145/-.
Shareholders holding 10 shares of Future Retail (FR) will get 101 shares of FEL valuing at Rs. 135.20/- per share a 49% premium compared to its Saturday price of Rs. 135/.20-.
Shareholders holding 10 shares of Future Supply Chain (FSC) will get 131 shares of FEL valuing at Rs. 262/- per share, a 74% premium compared to its Saturday price of Rs. 151/-
Shareholders holding 10 shares of Future Market Network (FMN) will get 18 shares of FEL valuing at Rs. 36/- per share, a premium of 35 per cent compared to its Saturday price of Rs. 27/-.