Mega Deal aftermath! RIL soars 3%, Future Retail jumps 20% and other Future Group stocks freeze at upper circuit

RIL will acquire Future Group's above-mentioned businesses on a slump sale basis for lumpsum aggregating of Rs24,713cr.

Aug 31, 2020 10:08 IST India Infoline News Service

A deal has finally been struck between two Indian behemoths namely Reliance Industries (RIL) and Future Group, where the former will acquire the latter's retail & wholesale including logistics & warehouse businesses. Mukesh Ambani's RIL has intimated about entering into a scheme of acquisition with Kishore Biyani-led Group which was the most anticipated deal since the last few weeks. This has led to a huge rally on Monday in the companies involved.

On Sensex, RIL stock has gained by as much as 2.66% by opening at an intraday high of Rs2,172 per piece before correcting.  Similarly, Future Retail opened at the day's high of Rs162.30 per piece which is also the upper circuit, resulting in a 20% jump in stock so far.

At around 09.44 am, RIL is trading at Rs2,148.50 per piece up 1.56%, while Future Retail performs at Rs158.65 per piece surging by 17.56% on Sensex.

At the same time, Future Enterprises (FEL) has frozen to the upper circuit of Rs21.20 per piece advancing by nearly 5%. Similar performance was witnessed in Future Consumer stock which was trading at the upper circuit of Rs12.05 per piece, Future Lifestyle at Rs152.35 per piece, Future Market Network at Rs27.95 per piece and Future Supply Chain at Rs158.60 per piece gaining by 5% each.

On Saturday, RIL and Future Group announced their partnership.

According to the agreement, Future Group's retail & wholesale undertaking is being transferred to Reliance Retail and
Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of Reliance Retail Ventures (RRVL). Further, the Future Group's logistics & warehousing undertaking will be transferred to RRVL.

The acquisition is being carried as part of the Scheme in which Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises. The companies involved are the ones listed on stock exchanges apart from Future Enterprises.

Isha Ambani, Director, Reliance Retail Ventures Limited, said: "With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which has played an important role in the evolution of modern retail in India."

Furthermore, as per the agreement, RRFLL has proposed to invest Rs1,200cr  in the preferential issue of equity shares of FEL to acquire 6.09% of post-merger equity. Also, additional Rs400cr is proposed to be invested in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in RRFLL acquiring further 7.05% of FEL.

The deal is expected to help Reliance retail to accelerate providing support to millions of small merchants in increasing their competitiveness and enhance their income during these challenging times.

Overall, RIL will acquire Future Group's above-mentioned businesses on a slump sale basis for lumpsum aggregating of Rs24,713cr. 

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