Reliance Industries (RIL) likely to acquire Future Group’s retail biz for Rs 27,000 crore

Future Retail Ltd, Future Consumer, Future Lifestyle Fashion, Future Supply Chain and Future Market Networks will join Future Enterprises Ltd (FEL) before the sale of assets

New Delhi: Billionaire Mukesh Ambani led by Reliance Industries (RIL) is in the final stages of negotiations with the Group of the Future led by Kishore Bayani to acquire the retail business. A recent B2B report indicated that RIL sources are close to buying Future Group’s retail assets for Rs 24,000-27,000.

Two people familiar with the details of the deal told the publication that the estimated value of the transaction includes the obligations of the future group that RIL plans to absorb. The sources also revealed that five included entities, including Future Retail Ltd, Future Consumer, Future Lifestyle Fashions, Future Supply Chain, and Future Market Networks, will merge into Future Enterprises Ltd (FEL) before the sale of the assets.

The report cited one of the sources saying that RIL has exclusivity in the deal until July 31, when it needs to sign a binding agreement. According to the daily financial report, FEL will sell its retail assets lightly to a subsidiary of Reliance Industries Ltd.

Please note, according to research company reports, Future Retail manages more than 1,500 stores in India in various formats, including Big Bazaar, Fashion at Big Bazaar (FBB), ezone, and Foodhall. RIL will handle retail, supply chain, and related businesses at Future Group, which will end the retail business at Biyani.

RIL, Future Retail share price surge:

After media reports surfaced on Monday that RIL was in final talks to acquire Future Group's future retail business, the oil companies' shares rose to Telecom, raising RIL's market value to Rs 14.58 lakh crore. It closed at Rs 2,155.85 on the NSE after touching its highest standard of living at Rs 2,198  during intra-day trade on Monday. Shares of Future Retail Ltd were also up nearly 5% yesterday. Shares of Future Retail rose 5% to Rs 100.20, reaching the so-called upper circle, closing 4.97% to Rs 100.35.

Future Group debt:

It is worth mentioning that Future Retail is currently dealing with a cash crisis since it defaulted on a Rs 100-crore ($14-million) repayment on its $ 500 million foreign currency bonds last week. In fact, Future Group has accumulated huge debt over the years. As of September 30, 2019, the debt of the companies included in the group amounted to Rs 12,778 crore.

RIL has reportedly requested that the group of future lenders "significantly reduce debt and facilitate repayment terms. Previous reports were discussing to reduce about 30 percent of outstanding accounts receivable of more than Rs 6,000 crore and refinancing part of the loans for another period of 5 -7 years.

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