RIL soars 3%, Future Group stocks freeze at upper circuit as CCI approves mega retail deal

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

Nov 23, 2020 07:11 IST India Infoline News Service

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The behemoth deal between Mukesh Ambani and Kishore Biyani has taken one step further, as the Competition Commission of India ("CCI") has approved the composite scheme of arrangement between Future Group and Reliance Industries (RIL). On Monday, investors welcomed the move with open arms as RIL and Future Group's listed stocks were trading on a bullish note.

At around 12.54 pm, RIL was performing at Rs1960.25 per piece up Rs61.05 or 3.21% on Sensex. The stock has touched the day's high of Rs1970 per piece.

Meanwhile, on Sensex, Future Group's listed companies froze at the upper circuit limit.

On Sensex, Future Enterprises was trading at the upper price band of Rs10.45 per piece up 4.92%, followed by Future Market Networks at Rs16.65 per piece up 4.72%, Future Consumer at Rs8.27 per piece above 4.95% and Future Supply Chain Solutions at Rs102.65 per piece higher by 4.96%.

Also, Future Retail jumped by 9.95% and was trading at the upper price band of Rs79 per piece and Future Lifestyle Fashions at Rs90.30 per piece above 9.99% on Sensex.

Future Retail in its regulatory filing on Saturday said, "We wish to inform that application collectively made by Reliance Retail Ventures Limited (“RRVL”) and Reliance Retail and Fashion Lifestyle Limited (“RRVL WOS”) to Competition Commission of India (“CCI”) under Section 6(2) of the Competition Act, 2002 (“Act”), for the acquisition of the logistics and warehousing undertaking and the retail and wholesale undertaking of the Future Group Entities by RRVL and RRVL WOS respectively (proposed combination), has been approved by CCI in its meeting held on 20th November 2020, under Section 31(1) of the Competition Act, 2002."

As per the scheme of the arrangement, 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.

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.

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

However, the RIL and Future Group deal faced a blow last month when Jeff Bezos’ Amazon received an interim relief from Singapore arbitration court over arbitration matter. The US-based e-commerce giant has claimed that the Kishore Biyani-backed group violated an investment contract when it agreed to sell retail assets to Reliance Retail.

However, with CCI approval now the deal can be expected to complete anytime soon. 

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