Who are the Parties?
Future Group is an Indian conglomerate company founded by Kishore Biyani, having its headquarters at Mumbai, India. There are various popular chains like Big Bazaar, Food Bazaar, Brand Factory, Central, etc. Reliance Retail Ventures Limited is a subsidiary of Reliance Industries Limited operates the retail business which offers consumer electronics, food, groceries, fashion and lifestyle products.
What is the deal?
There are five listed companies of the Future Group who shall merge into Future Enterprises-
1. Future Enterprises
2. Future Retail
3. Future Consumer
4. Future Life Style Fashions
5. Future Supply
The Retail Business + Wholesale Business shall be acquired by Reliance Retail and Fashion Lifestyle Ltd. and the Logistics Business + Warehouse Business shall be acquired by Reliance Retail Ventures Limited.
Reliance Retail Ventures Limited acquired entire retail & wholesale, logistics and warehousing business of Future Group for Rs. 24,713 crores with this all the debts and liabilities related to these businesses shall be handled Reliance. This deal is a all cash deal in which all the financial transactions will made entirely in money. Future Group had a consolidated debt of Rs. 12,778 crores as of last year and Future Retail had a gross debt of Rs. 2,657 crores as of 2019.
Reliance will take over various businesses involving selling of food, personal case products and home utility products. However, Future Group’s financial and insurance business is not part of the deal made. Post deal Reliance Retail will hold 13.14% stake in Future Enterprises Ltd. which will help in taking over the debt of Rs. 12,500 crores.
What is Consolidated Debt?
Various debts are combined into a single and larger loan which probably have more terms of repayment. These terms include lower interest rates, lower monthly payments. This basically helps in dealing with liabilities easily.
Who made the representations?
Khaitan & Co. and Shardul Amarchand Mangaldas assisted and advised Reliance Retail Limited along with its wholly-owned subsidiaries Reliance Retail and Fashion Lifestyle Limited in confirming the deal. JM Financial Securities advised the Future Group promoters to carry on the deal.
What will happen after the deal?
Various businesses with respect to manufacturing and distribution of consumer products, insurance, textile partnership shall be left with Future Group. Reliance Retail and Fashion Lifestyle Ltd. shall invest a total amount of Rs. 2,800 crores. Rs. 1200 crores shall be invested in Future Enterprises Ltd. for 6.09% stake and Rs. 1,600 crores shall be invested for 7.05% stake in the company.
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