MUMBAI: Kishore Biyani-led Future Retail said on Thursday that it would acquire loss-making premium retail chain HyperCity Retail for Rs 655 crore in a stock-and-cash deal. HyperCity, owned by Shoppers Stop (K Rahejas Group) operates 19 large-format premium stores across the country. The deal is expected to be sealed over the next 3-5 months, subject to approvals. On completion of the transaction, HyperCity will become a wholly-owned subsidiary of Future Retail.
It is expected to add 1.4 million sq ft of retail space to Future Retail, which operates 13.8 million sq ft in 221 cities. The board of both companies decided on the transaction and accordingly, Future Retail will allow 93.1 lakh shares with a face value of Rs 2 each to HyperCity promoters, aggregating Rs 500 crore, on a preferential basis, Future Retail said in a BSE disclosure. 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.
For Future Retail, this will be the third biggest acquisition including Bharti Retail and Big Apple. The deal will give Future’s Big Bazaar access to a premium brand helping Biyani consolidate his footprint in western states and within the hypermart vertical. Importantly, it will augment Future’s strategy to more than treble its revenue to Rs 75,000 crore by 2021.
As of June 2017, HyperCity had Rs 327 crore debt and though sales rose 8 per cent during the June quarter, net loss stood at Rs 26.9 crore. For Shoppers Stop, the sale will help it pare debt.