Mukesh Ambani on Saturday tightened his grip on India’s organised retail sector by acquiring the retail and wholesale business and the logistics and warehousing division from Future Group for a lumpsum consideration of Rs 24,713 crore.

The acquisition, which has been in the works for quite some time, will bring retail formats such as Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory within the Reliance fold. The acquisition cost includes certain borrowings and current liabilities of Future Group.

The estimated debt of Future Group was nearly Rs 13,000 crore as on September 30, 2019.

The transaction will see Reliance Retail and Fashion Lifestyle Ltd (RRFLL), a subsidiary of Reliance Retail Ventures Ltd (RRVL), acquiring 6.09 per cent of the post merger equity of Future Enterprises Ltd (FEL) and investing another Rs 400 crore in preferential issue of equity warrants, which after conversion will see its stake going up by another 7.05 per cent in the company.

RRVL is a wholly owned subsidiary of Reliance Industries.

Merger first

To begin with, the Future Group is merging close to five companies carrying the formats or the businesses that will go into the Reliance fold into Future Enterprises. The retail and wholesale undertaking of Future Group is being transferred to RRFLL, while the logistics & warehousing undertaking will go to RRVL.

A Future Group statement said after this transaction, FEL will retain the manufacturing and distribution of FMCG goods and the integrated fashion sourcing and manufacturing business and its joint ventures with Generali and NTC Mills.

“With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which have played an important role in the evolution of modern retail in India,’’ said Isha Ambani, director of RRVL.

“As a result of this reorganisation, Future Group will achieve a holistic solution to the challenges that have been caused by Covid and the macro economic environment.

“This transaction takes into account the interest of all its stakeholders, including lenders, shareholders, creditors, suppliers and employees. We are pleased that our strong retail franchise and brands, that we have created over time, are going into stronger hands and will continue to grow and delight Indian shoppers,’’ Kishore Biyani, group CEO of Future Group, said.

He feels after the transaction, FEL will emerge stronger as its manufacturing and distribution of FMCG products and integrated fashion sourcing and merchandising will benefit from supply agreements with RRFLL.

This deal, Biyani observed, will also enable FEL to focus on the creation of new age fashion brands apart from having a stronger balancesheet.