Indian billionaire Mukesh Ambani-led Reliance Industries Ltd. (RIL) is reportedly in the final stage negotiation of acquiring Kishore Biyani owned Indian conglomerate company, Future Group. As per the reports, the acquisition deal is final at approximately INR 24,000 to 27,000 crores.
Two officials known with the matter said that the estimated deal value involves the Future Group liabilities, which RIL is planning to absorb. The officials also mentioned that 5 listed entities, which include Future Consumer, Future Retail Ltd, Future Supply Chain, Future Lifestyle Fashions, and Future Market Networks, will be merged into Future Enterprises Ltd (FEL) before the acquisition of the assets.
As per the sources, RIL has selectness on the agreement till 31st July; it requires signing a binding agreement. The financial daily report also mentioned that FEL would conduct its retail assets slump sale to one of the Reliance Industries Ltd. retail subsidiaries.
According to research firms' reports, Future Retail manages more than 1,500 stores in India under various formats, which include Foodhall, ezone, Big Bazaar, and Fashion at Big Bazaar (FBB). Reliance Industries will overtake the Future Group's supply chain, retail, and other related businesses, which would put a full stop on Biyani's retail business.
After the news of Future group acquisition by RIL spread in the media, the telecom giant was engaged in final talks of the retail business's purchase, RIL's shares rise, taking its market capitalization to INR 14.58 lakh crore. On 27th July, RIL closed its shares on NSE at INR 2,155.85 after touching its life-time high of INR 2,198 during the intra-day trade. In addition to the higher share prices, RIL had announced that Qualcomm, the global leading wireless technology innovator had committed to invest nearly INR730 crore in Jio Platforms to reinforce Jio's initiatives for building an advanced digital platform for Indian consumers.
On the other hand, Future Retail Ltd shares also jumped to almost 5% to INR 100.20, hitting a so-called upper circuit, and closed at 4.97% up at INR 100.35.
The point worth mentioning is that Future Retail is currently struggling with cash crunch since it defaulted on an INR 100 crore ($14 million) repayment on its $500 million foreign currency bonds 7 days. Over the years, Future Group has cumulated heavy debt. As of 30 September 2019, the debt of Future Group's listed companies was INR 12,778 crore.
Over the clearance of debts, RIL reportedly had asked Future Group's lenders for a huge haircut on debt and more accessible repayment terms. According to the previous reports, the discussions with the lenders were underway for a haircut of nearly 30% on outstanding dues of more than INR 6,000 crores and borrowing refinancing part for a further tenure of 5 to 7 years.
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