India's Future Group jumps as Reliance plans retail stores' takeover (updated)

Future Lifestyle Fashions

28/02/2022 05:34

(Updates with analyst comment, context)
    BENGALURU, Feb 28 (Reuters) - Shares in Future Group
companies surged on Monday, following reports that India's top
retailer Reliance Industries  RELI.NS  would take over at least
200 Future Retail stores after the debt-laden group failed to
make lease payments for them.
    Shares of Future Supply Chain Solutions  FUTE.NS , Future
Retail  FRTL.NS , Future Lifestyle Fashions  FLFL.NS , Future
Consumer  FTRE.NS  and Future Enterprises  FURE.NS  rose between
7% and 16%.
    Reliance's move follows failed efforts since 2020 to close a
$3.4 billion deal to buy the retail assets of Future, whose
partner Amazon.com Inc  AMZN.O  has blocked the transaction
citing violation of contracts. Future denies any
wrongdoing. urn:newsml:reuters.com:*:nL4N2T22QJ
     "Any resolution will be beneficial for Future shareholders
now whether through the courts or alternate strategies to close
the deal," said Samir Bahl, chief executive officer, Anand Rathi
Advisors, Mumbai.
    "Markets don't necessarily take sides, rather focus on value
creation for shareholders and any move that helps the business
is going to benefit shareholders and drive up demand for stock."
    Though Future has more than 1,700 outlets, all the 200
stores that Reliance will rebrand as its own will be the group's
flagship supermarket chain 'Big Bazaar', which was started about
two decades ago by Kishore Biyani, helping him earn the moniker
of "father of modern retail" in India.
    Billionaire Mukesh Ambani-owned Reliance Industries had
transferred leases of some stores to its name and sublet them to
Future, but is now taking over. Reliance has offered store staff
jobs on existing terms.  urn:newsml:reuters.com:*:nL1N2V209G
    In blocking the Future-Reliance deal, Amazon has long argued
that Future violated the terms of a 2019 deal in which the U.S.
retail giant invested $200 million in the company. Amazon's
position has been backed so far by a Singapore arbitrator and
Indian courts.
    Separately, Future Enterprises on Saturday said https://www.bseindia.com/xml-data/corpfiling/AttachLive/988077a4-ffb5-4da4-aca5-e93b44bcb1b5.pdf
 that Reliance Retail had extended the timeline to close the
deal to September 30, 2022 from March 31, 2022.

 (Reporting by Chandini Monnappa in Bengaluru; Editing by
Subhranshu Sahu and Rashmi Aich)
 ((Chandini.M@thomsonreuters.com; +918061822697;))