Kishore Biyani-led Future Retail on Monday said its board of directors approved the acquisition of retail and allied businesses of Heritage Foods in an all-stock deal.
The 124-outlet retail chain from Heritage Foods under the brand name ‘Heritage Fresh’, will get 3.65 per cent share-holding in Future Retail through fresh issuance of shares.
The deal is likely to benefit the firm promoted by Andhra Pradesh Chief Minster N. Chandrababu Naidu’s family after the company managed to shed the loss-making retail business which had eaten into the profits of dairy business for some time.
“Heritage Foods will get 3.65 per cent shares worth '295 crore from Future Retails. Heritage dairy products business will leverage the strength of Future Retail to spread pan-india,” said Nara Lokesh, director of Heritage Foods.
The stake would make Heritage Foods the third largest non-public stakeholder in Future Retail.
However, Future Retail that has set its eyes on opening 4,000 small format stores by 2021, will be hoping to use the Heritage Foods’ strong network to bolster its presence in southern India thus making the deal a win-win situation for both parties.
Future Retail will hope to complete the new acquisition with its existing network of 379 small format EasyDay stores in northern cities of India.
The deal will see Heritage Foods restructure its retail, bakery, agri-sourcing and veterinary care businesses under a fully-owned subsidiary.
Heritage Foods, which had doubled its retail business in the last 18 months, would expand at an even more faster pace, Mr Biyani said.
When quizzed about the existing employees at Heritage Foods, both Mr Biyani and Nara Lokesh were quick to assure workers that they wouldn’t need to worry as Mr Lokesh had set a precondition in regards to the safety of its current employees.
