Shoppers Stop soars 9% on Hypercity deal with Future Retail

Shares of Shoppers Stop surged nearly 9 per cent in intra-day trade today after the K Raheja Group's retail arm announced an agreement to sell Hypercity Retail to Future Group for Rs 655 crore.
The loss-making Hypercity, majority owned by Shoppers Stop, operates 19 large format premium stores in some key cities.
Shoppers Stop scrips jumped 8.92 per cent to Rs 552.40 during the day on BSE, but pared most of the gains towards the fag-end to close at Rs 513.20, up 1.19 per cent.
Reacting to the development, shares of Future Retail also rallied 5.94 per cent to Rs 559 during the day. It later closed at Rs 537.80, up 1.92 per cent on BSE.

"Shoppers Stop has announced the sale of its entire stake in HyperCity to Future Retail. We expect the deal to be a win-win proposition for both players," Edelweiss Securities said in a report.
The deal will give the Future Retail's flagship retail chain Big Bazaar access to a premium brand and great locations in main metros.

The board of both companies decided on the transaction and according to the term sheet, Future Retail will allot 93.1 lakh shares with a face value of Rs 2 each to Hypercity promoters, aggregating to Rs 500 crore, on a preferential basis, Future Retail said in an exchange filing yesterday.

The preferential allotment will be made at a premium of Rs 535 per share and the remaining Rs 155 crore will be made upfront in cash.
On completion of the transaction, Hypercity will become a wholly-owned subsidiary of Future Retail, the statement said.