The most awaited retail acquisition has just happened between Reliance and Future group. Long-time speculation was happening for the past one year. Future group is likely to merge or sell out its retail business.
The future groups were in talks with a few potential firms. Amazon has also considered once to acquire Future Group to put itself a strong player in India’s retail industry.
In the year 2018 Amazon took a 49% stake in the future coupons. Future Coupons contribute a 10% stake in the future Group. Somehow that time the deal could not end up in a successful manner.
RIL plans the deal in such a way that Amazon could not do anything regarding the deal. This time RIL business strategy worked for them and the largest retail acquisition happened in the Indian market.
Reliance Industry making this deal by acquiring the retail assets of the future group and conclude the most awaited retail acquisition in the Indian retail industry.
RIL designed this acquisition in such a way that its rival company Amazon will not be anymore a shareholder in the future group.
Father of Retail in India, Mr. Kishore Biyani who was the owner of the future group. He has started the future group in 1987 and slowly entered the retail industry in India and changed it completely. By the end of 2019, the future group was operating with almost 1500 retails stores in India.
Brands like Pantaloons, Bigbazar, Central, Brand Factory, and Ezone are very much priority stores for every Indian. They also have a consumer division under the future group.
This acquisition took place because of business profitability. A major concern for the future group is that they were unable to pay 14million dues on interest to the bank and they have also failed the grace period of 30 days which was given by the bank to pay the interest.
Mr. Biyani established these brands in the past three decades. By this time they made a 13000 cr debt burden under the name of the future group. This was a certain concern area for Mr. Kishore Biyani whether to continue this venture or not.
After looking for several potential options Reliance has made the offer to the future group for buying its business.
Mukesh Ambani offered 27513cr against this deal. Reliance Industries Limited acquires the Future Group business along with debts and liabilities for its entire Retail business. Within the deal, RIL has also taken a 5% stake in its consumer business.
That makes RIL a strong foothold in this most awaited retail acquisition process. This deal is a combination of five entities of the future group including retail, lifestyle, and consumer division. Reliance Retail will take over current liabilities and borrowings under the 24713 cr cash deal as per agreement.
After all, the transaction is made. but, the future group can retain some of its entities like manufacturing and distribution of consumer products, fashion, and textile with NTC mill and insurance venture with Generali.
Reliance will also plunge an additional 2800 cr to grab a 7.05% additional stake.
It is an additional boost for the Reliance Industry to take over more than 1500 retail stores across India. By acquiring the future group RIL expands its market share in the Indian Retail Industry.
This acquisition will surely give faith among the shareholders, employees, and all small retailers or vendors who are associated with the future group. With this acquisition Reliance will operate more than seven times its revenue over the main competitor ‘DMart’. The revenue will go up to almost $26 billion.
The director of Reliance Retail Isha Ambani told that this will ensure to keep interested among all stakeholders. She further added that Reliance Industry can operate future retail-like its innovation in other Modern Retail stores.
This acquisition will change the entire modern retail market in India and, innovation will help Reliance Industry to grow in the Indian retail and e-commerce industry.
In the current Indian retail market, the majority share is coming from grocery, apparel, footwear, and electronics. Reliance Industry is a major contributor to the retail business. But for RIL three fourth of its retail business is coming from the electronic segment and acquiring the future retail will ensure RIL a major player in the modern retail industry.
Buying future’s grocery and lifestyle stores will play a key role in Reliance Industry’s modern retail expansion in the Indian market. This acquisition will create a major impact among other competition brands, especially in the grocery and lifestyle segments.
Brands are like Bigabazar in the grocery segment and lifestyle bands like Lee cooper, Indigo Nation, etc. will definitely add a new feather to Reliance Industries Limited. It is truly the most awaited retail acquisition in India and it will be going much bigger in the coming years.