Reliance Makes $3.4B Offer For India’s 2nd Largest Retailer

Reliance Makes $3.4B Offer For Future Group, India’s 2nd Largest Retailer

India’s retail competition between Walmart’s Flipkart, Amazon and Reliance Retail Ventures is expected to intensify.

The Financial Times (FT) reported billionaire Mukesh Ambani’s Reliance announced Saturday (Aug. 29) that it plans to buy Future Group’s retail divisions for 247 billion rupees ($3.4 billion).

Mumbai-based Future Group, India’s second-biggest brick-and-mortar retailer, is a conglomerate founded by Kishore Biyani. It is best known for its retail chain of hypermarkets which combine grocery and departmental stores, as well as discount stores and supermarkets.

FT reported Biyani has struggled with fierce competition from Reliance Retail, Flipkart and Amazon and was saddled with more than $1.7 billion in debt.

Last week, Future Retail made a $14 million interest payment to lenders just in time to avoid a default on $500 million in debt.

“Due to the nationwide lockdown imposed to restrict the spread of COVID-19 pandemic, and consequent restricted business operations of the company, the liquidity position has been affected, causing us to miss the service of the payment of interest due on the USD notes on 22nd July 2020,” the company said in a statement.

Following the purchase, Future Group’s retail and wholesale businesses will be merged with Reliance.

Analysts told FT if the deal closes, it will give Ambani more ammunition to do battle with Amazon and Walmart-owned Flipkart to dominate India’s retail market and attract investors.

“By taking out Mr. Biyani, and absorbing the second-largest retail network in the country, the gap between them and anyone else is so much that tomorrow, you can go to anybody saying: ‘If you want to do some retail business in India, I’m the partner to play,’” Arvind Singhal, chairman of Technopak, a New Delhi-based consultant, told FT.

Earlier this month, Reliance acquired a major stake in Vitalic Health and subsidiary Netmeds. The stake includes 60 percent in Vitalic and 100 percent direct equity ownership in subsidiaries Tresara Health, Netmeds Market and Dadha Pharma Distribution.

News of the deal comes one month after Amazon began early-stage discussions to acquire a 10 percent stake in Reliance.