Amazon to stick on as Future Enterprises' shareholder after Reliance deal

Rival Reliance Retail too will be investor in company

American giant Amazon, which has a five per cent stake in Future Retail, will stick on as a shareholder in Future Enterprises after the sale of its retail, logistics, warehousing and wholesale assets to Reliance Retail.
 
"All existing Future investors including Amazon will have a stake in Future Enterprises on the basis of the swap ratio that has been determined for the merger," an informed source told Business Standard.
 
Given that five listed companies will merge into Future Enterprises, the shareholding of Amazon is expected to come down following the merger, said persons in the know.
 
Amazon, interestingly, will be a shareholder in a company, where rival Reliance Retail will have a 13.14 per cent stake.
 
On Saturday, the Future group said that Reliance Retail Fashion Lifestyle Limited, a wholly-owned subsidiary of Reliance Retail Ventures, would invest Rs 1,200 crore in Future Enterprises via a preferential issue (of equity shares) to acquire 6.09 per cent stake.
 

An additional Rs 400 crore would be pumped into the company via a preferential issue of equity warrants for a 7.05 per cent stake on conversion.
 
While Amazon's future course of action is unclear, Reliance will have a greater say over pricing strategies for products sold in its stores, since the residual business sitting within Future Enterprises would be involved in the manufacture, sourcing and distribution of fast-moving consumer goods and fashion brands. Future group's joint ventures in insurance and textiles would also be part of the residual entity.
 
With the acquisition of retail assets, Reliance will now have access to close to 1,800 stores across Future Group's Big Bazaar, FBB, Easyday, Central and Foodhall formats, which are spread in over 400 cities in India. Reliance Retail's store count will expand to over 13,500, consolidating its position as a retail giant, sector analysts said.
 
Reliance Industries’s chairman Mukesh Ambani has already indicated that Reliance Retail and JioMart have received interest from global strategic and financial investors and that they would be inducted in the quarters ahead.The acquisition will pave the way for those investments to come in, sector experts said.