Future Retail has signed a definitive agreement to acquire the retail, agriculture, and bakery businesses of Heritage Foods in an all-stock deal on Monday. This was announced by Brahmani wife of Lokesh who are partners in the Heritge group.
Heritage Foods, owned by Andhra Pradesh Chief Minister N Chandrababu Naidu, will get 3.65% stake in Future Retail worth of Rs 295 crore.
With this deal, Heritage will leverage the strength of Future Retail to expand the market for its dairy products across India, Heritage Foods director Nara Lokesh said.
The retail business of Heritage Foods includes the chain of 124 Heritage Fresh stores in Hyderabad, Bengaluru, and Chennai with 2,000-8,000 square ft store sizes. These small format stores will compliment well with Future Retail’s existing network of 379 small EasyDay stores in north India.
Future Retail chairman and managing director Kishore Biyani said, “the consolidation of Heritage small format stores forms part of our strategy of aggressively expanding our small stores network to around 3000 stores nationally by 2021, including 2,000 franchises, to service daily and weekly needs of customers, even as Big Bazaar focuses on delivering value and catering to the monthly consumption basket of urban India.”
The retail and allied businesses of Heritage Foods posted revenues of Rs 629.7 crore during the year 2015-16 in addition to its profit making dairy business, which has registered Rs 1,769 crore revenues during the year.
As part of the scheme of arrangement for the acquisition, Heritage Foods will spin off its retail, bakery, agri-sourcing and veterinary care business into a fully owned subsidiary.
Subsequently, all these businesses, except veterinary care, will then be merged with Future Retail Limited. The scheme shall be subject to approvals from relevant regulatory authorities and shareholders of the companies.
Earlier, Future Group has merged Bharti Retail’s EasyDay network, Nilgiris chain, and Godrej Group’s Aadhaar chain. The group has also recently taken over the leases of the ‘Sabka Bazaar’ store chain and also services over 5,000 Annapurna Bhandaar stores, which were the fair price shops, operated in the state of Rajasthan.
