Merger For A Rs. 15000 Crore Chain

Merger For A Rs. 15000 Crore ChainKishore Biyani-led Future Group has agreed to merge its retail business with rival Bharti Retail in an all-stok deal worth Rs.750 crore to create one of the biggest super market chains with a turnover of Rs 15,000 crore.

This is the second major consolidation exercise within two days in the fast-growing Indian retail sector after Aditya Birla Group on May three announced merging of all its apparel retail businesses into a single entity.

The deal between the Future and the Bharti groups also involves the merger of their respective retail infrastructure businesses, creating two separate companies, Future Retail for the front-end activities and Future Enterprises for infrastructure.

Future Group promoters would hold a 46-47 per cent stake in each of the two companies, while Bharti Retail will have about 15 per cent holding in each of them. As part of the deal, Bharti Retail will get share worth Rs. 500 crore immediately, while shares worth another Rs. 250 crore will be converted at a later date.

“We are merging our retail businesses to create two separate companies…. The combined retail entity will have a total turnover of Rs.15000 crore,”Future Group CEO Kishore Biyani told newsmen in New Delhi.

Bharti’s EasyDay chain of stores and Future’s Big bazar stores will continue to operate, Biyani said. Bharti will have one member on the board of each of the two new companies. The new retail entity will have one of the largest networks in the country with 570 stores across 243 cities.

The Future-Bharti deal comes a day after Birla Group merged its apparel businesses into a Rs. 5,290-crore entity named Aditya Birla Fashion & Retail, which will be largest pure-play fashion lifestyle company in the country.

Biyani said the group plans to open 4000 smaller format stores by 2021, up from 570 stores now.

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