Future Retail, Bharti Retail to merge

Future Retail will host the retail ops of both the companies; Future Enterprises will host the infrastructure, investments and assets

Kishore Biyani owned Future Retail and Bharti group's Bharti Retail will be merged with each other.

The Future group has three main entities, Future Retail that runs hypermarkets and supermarkets, Future Lifestyle Fashions, and Future Consumer Enterprise, which acquired the Nilgiris chain in the south from private equity firm Actis for Rs 300 crore. Bharti Retail runs 15 Easyday hypermarkets and 200 supermarkets.

The merger will happen in two ways. The retail business of Future Retail will be demerged into Bharti Retail and the retail infrastructure business of Bharti will be demerged into Future Retail,  Future Retail said in a statement.

The first entity, to be known as Future Retail Limited post the demerger, will host the retail operations of both the entities.  The second entity, to be known as Future Enterprises post  he demerger will host the infrastructure, investments and  assets of both the companies.

The combined entity will have over 570 retail stores in 243 cities with operational retail space of over 18.5 million square feet. 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.

Future Retail will issue one fully paid-up equity share of Rs 2 each of Bharti Retail. 4,34,78,261 equity shares with face value of Rs 2 each, fully paid up of Future Retail will be issued on demerger to the equity shareholders on Bharti Retail. The existing holders of optionally convertible debentures (OCDs) of Bharti Retail aggregating to Rs 250 crore will hold OCDs in Bharti Retail and Future Retail totally to the same amount. These OCDs will be convertible into equity shares of the respective companies, at the option of the company, at the price prescribed under Sebi (ICDR) regulations, 2009 for preferential issue of securities on date of conversion. Equity shares of Bharti issued to the shareholders of Future, pursuant to the scheme shall be listed on the stock exchanges.

Commenting on the proposed partnership, Kishore Biyani, Founder and Group CEO, Future Group said, “Bharti Retail’s strengths and network compliment perfectly with that of Future Retail. It will bring us closer to millions of consumers and provide new opportunities for our supply partners. The operational efficiencies that can be derived from the merger will create significant value for our shareholders.”

Rajan Bharti Mittal, Vice Chairman, Bharti Enterprises said, “We are delighted to announce this partnership, which brings together the strengths of the two companies and provides a strong platform for future growth. The partnership offers compelling synergies in terms of reach, efficiency and experience to build a truly world--?class retail network to serve the Indian consumer. Retail is emerging as the  next big growth engine for India and we will be well positioned to be a major player in this growth story.”