India’s Ambani to pay $3.4b for Future Group retail units

Bloomberg

Reliance Industries said it will acquire the retail, wholesale, logistics and warehousing units of India’s Future Group for 247.1 billion rupees ($3.4 billion), in a transaction that will propel Mukesh Ambani’s ambitions to dominate India’s retail sector.
Future Group will merge some of its remaining businesses into Future Enterprises, Reliance Retail Ventures said. Ambani’s unit will then invest 12 billion rupees to acquire about 6.1% stake in Future Enterprises, according to the statement.
The transaction with the Future Group will bolster Reliance Retail — already the nation’s largest retailer by the number of stores — in a sector that’s estimated to be worth $1.3 trillion by 2025 from $700 billion in 2019, according to a February study by Boston Consulting Group and Retailers’ Association India. The deal will also help the indebted Future Group pare its borrowings.
“Strong retail franchise and brands, that we have created over time, are going in stronger hands,” Kishore Biyani, founder of the Future Group said. “This transaction takes into account the interest of all its stakeholders including lenders, shareholders, creditors.”
After disrupting India’s telecom sector, Ambani is now pushing ahead with his ambitions in the brick-and-mortar retail and e-commerce space. Asia’s wealthiest man is on a mission to transform his
conglomerate into a consumer-services giant and reduce dependence on revenue from its traditional businesses of petrochemicals and oil refining.
Reliance Industries’ deal with the 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 billion-people-plus market that’s still open to foreign firms.
The sales will help Biyani pay debts. The group has about
7.5 billion rupees of interest and principal due to bondholders this year, and 433.4 million rupees of the bill falls on
August 31, data compiled by Bloomberg show.
The Future Group has five main listed units including
Future Consumer Ltd, which sells food, home and personal care products, and Future Lifestyle Fashions Ltd that operates fashion discount chain Brand Factory.