Future group shares, RIL gain after CCI nod for Reliance Retail deal

Shares of listed companies of Future group were locked in their respective upper circuit limits on the BSE on Monday after the Competition Commission of India (CCI) on Friday cleared Reliance Industries' (RIL) bid to buy Future group's retail, wholesale and logistics assets.

On August 29, Reliance Industries (RIL) and Future Enterprises (FEL) announced the deal wherein Reliance Retail will acquire the retail & wholesale, logistics & warehousing business from Future group.

Future is seeking to get out of its debt trap with the deal, while Reliance is looking to consolidate its position as the country's largest organised retailer with the transaction. The two players have said that they will go ahead with the regulatory process despite Amazon's objections.

After this transaction, FEL will retain the manufacturing and distribution of fast moving consumer goods (FMCG) and integrated fashion sourcing and manufacturing business and its insurance joint ventures (JVs) with Generali and JVs with NTC Mills.

Post this exercise, FEL will emerge strong with businesses in manufacturing and distribution of FMCG products and integrated fashion sourcing and merchandising. These businesses will further benefit from supply agreement with Reliance Retail and Fashion Lifestyle. This deal will also enable FEL to focus on the creation of new age brands in the FMCG and fashion space and expand its reach, the company said.

“Reliance Group’s acquisition of Future Retail's assets through scheme of arrangement and matters connected therewith is positive for Future Group and Future Retail's outstanding USD denominated notes,” rating agency S&P Global had said on September 15, 2020.

Among individual stocks, Future Retail and Future Lifestyle Fashions were locked in 10 per cent upper circuit at Rs 79 and Rs 90.30, respectively, on the BSE. Furure Enterprises (Rs 10.45), Future Consumer (Rs 8.27) and Future Supply Chain Solutions (Rs 102.6) were locked in 5 per cent upper circuit on the BSE. In comparison, the S&P BSE Sensex was up 0.20 per cent at 43,969 points at 11:26 am.

However, despite today’s gain, the Future group stocks have underperformed the market by falling up to 30 per cent in the past three months, as compared to 14 per cent rise in the S&P BSE Sensex.

Meanwhile, shares of RIL were up 4 per cent at Rs 1,970 on the BSE in intra-day trade today. The company, on Thursday, said that RIL and Reliance Retail Ventures Limited (“RRVL”) have completed the current phase of partner induction and fund raise exercise for RRVL. RRVL has received cumulative subscription amount of Rs 47,265 crore from the financial partners and allotted around 693 million equity shares to them.