The merger would combine the strengths of Bharti’s retail operations with those of India’s oldest and biggest chain of super markets and hyper markets
New Delhi : In yet another consolidation in the domestic modern trade sector, Kishore Biyani-led Future group is taking control of Bharti Retail by merging its retail business with the latter in a stock deal worth Rs 750 crore to create a Rs 15,000-crore entity with one of the largest networks in the country.
This is the second major consolidation exercise within two days in the fast-growing Indian retail sector, after Aditya Birla Group on Sunday announced merging all its apparel retail businesses into a single entity.
In a two-tier deal announced on Monday, Future Retail will demerge its retail business to be merged into Bharti Retail, while Bharti’s retail infrastructure business will also undergo a similar process to be merged into Future Retail.
As part of the deal, Bharti Retail will get 15% stake in both the merged entities. Bharti Retail will get Rs 500 crore stocks at present and Rs 250 crore stocks 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 15,000 crore,” Future Group CEO Kishore Biyani told reporters here.
Future Group promoters will hold 46-47 per cent stake each in the two new entities. Bharti will have representation on their board with one member. The new retail entity will have one of the largest networks in India with 570 stores across 243 cities. It will operate 203 Big Bazaar and ‘easyday’ hypermarkets, 197 Food Bazaar and ‘easyday’ supermarkets, and 171 other stores comprising of Home Town, eZone, FBB and Foodhall.
Stating that Bharti is not exiting from retail business, Bharti Enterprise Vice Chairman Rajan Bharti Mittal said: “We are only merging. This was needed for faster growth. It is a strategic fit for both the companies.” Retail is an evolving sector and it needs economy of scale. Operational efficiency from the deal will create value for both shareholders and customers, he added.
The announcement comes a day after Aditya Birla Group merged its apparel businesses into a Rs 5,290 crore entity named Aditya Birla Fashion and Retail (ABFRL), which will be the largest pure-play fashion lifestyle company in India.
Biyani said they plan to open 4,000 smaller format stores by 2021, up from the total of about 570 stores now. When asked about new stores, Biyani said all new small format stores in North India will be opened under Easyday brand. In South and West India, stores will be opened under Nilgiri and KB’s brand.