Reliance to buy Future Group’s businesses in $3.4 billion deal

Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries Limited, on Saturday announced that it is acquiring the retail, wholesale, logistics and warehousing business from the Future Group as going concerns on a slump sale basis for lump sum aggregate consideration of Rs24,713 crore ($3.4 billion), subject to adjustments as set out in the composite scheme of arrangement (Scheme).

The above acquisition is being done as part of the scheme in which the Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises Limited (FEL).

As a part of the same scheme, the retail and wholesale undertaking is being transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL, the logistics and warehousing undertaking is being transferred to RRVL and RRFLL also proposes to invest Rs1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 per cent of post-merger equity and Rs400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75 per cent of the issue price, will result in RRFLL acquiring further 7.05 per cent of FEL.

Isha Ambani, Director, Reliance Retail Ventures Limited, said: “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.

“We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands. We are committed to continue providing value to our consumers across the country.”

The acquisition of the retail, wholesale and supply chain business of the Future Group complements and makes a strong strategic fit into Reliance’s retail business. This will help Reliance retail to accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times.

Future Group’s portfolio composition in apparel, general merchandise and own FMCG brands will allow for a wider offering to its customers.

This acquisition is subject to SEBI, CCI, NCLT, shareholders, creditors and other requisite approvals. Reliance Retail Ventures Limited (RRVL) is a subsidiary of Reliance Industries Limited, carrying on the Consumer Supply Chain Business and Consumer Retail Business through its subsidiaries.

RRVL reported a consolidated turnover of Rs1.62 lakh crore and net profit of Rs5,448 crore for the year ended March 31, 2020.

Meanwhile, Reliance Retail has issued a strong caution notice for unscrupulous elements who are duping innocent people in the name of granting franchisee for Jiomart services.

In a public caution notice, Reliance Retail said it is the registered licensee of trademarks, Jio and Jiomart, a recently launched online grocery service.

“We would like to inform the public at large that we are not operating any dealership or franchisee model currently nor have we appointed any franchisee or any agent for appointing franchisee or dealer in any manner whatsoever”, the notice said.

“Further, we do not charge any amount under the pretence of appointing a person as a franchisee”, Reliance Retail said.

“We have been informed about certain unscrupulous individuals who are creating fake websites, pretending to be us or associated with us and duping innocent individuals under the pretense of granting franchisee of Jiomart services”, Reliace Retail caution notice said.

“The public, manufacturers, traders and dealers are hereby cautioned against such unscrupulous individuals and their online fraud activities and are hereby warned that we will not be responsible for any business dealing with such dishonest individuals”, the company warned.

“It is hereby notified that we attach great value to our goodwill, reputation and our trademark names and would not hesitate to institute criminal or civil proceedings against such persons to prevent misuse of our trademarks and protect our goodwill and reputation in any manner whatsoever”, the company said.

Separately, world’s largest oil company Aramco remains committed on its investment plan in India, including a $15 billion deal with Reliance Industries, even though Covid-19 pandemic has made life difficult for oil companies with suppressed demand and falling oil prices and wide scale erosion in valuations.

Replying to a query from IANS, Aramco said that it remains interested in all its Indian investment plan and will give appropriate updates soon.

Indo-Asian News Service