Future Retail acquires HyperCity for Rs 655 crore from Shoppers Stop

Kishore Biyani's Future Retail will acquire Shoppers Stop's loss-making retail chain HyperCity for Rs 655 crore in a part cash and part stock deal.

The deal, which is likely to be completed in the next three to five months, will see HyperCity Retail India Limited become a wholly-owned subsidiary of Future Retail.

In a stock exchange filing on Thursday evening, Future Retail said it will allot 9.310 million shares of Rs 2 face value to HyperCity Retail’s 15 shareholders at Rs 535 per share on a preferential basis.

Of the total deal value, Rs 500 crore will come from these shares. The remaining Rs 155 crore will be paid in cash.

The deal is subject to approval of Shoppers Stop shareholders. The company will hold an extra-ordinary general meeting on October 13 in this regard.

This is Future Retail's fifth major acquisition in the past four years and will add more than a million square feet of retail space to the company.

Future Retail has acquired four regional retail brands (Bharat Retail and Big Apple in north India, Heritage Fresh and Nilgiris in south India) to strengthen its store network in the past. Future Group’s agenda to expand its grocery retail footprint pan-India had led to it eyeing HyperCity, a business that hasn’t done too well under Shoppers Stop.

Big Bazaar, Future Retail's flagship brand, is India's largest organised store-based retail market, with nearly 20-25 percent market share. The brand’s 253 outlets are spread across 127 cities in 26 states of India (as on June 30, 2017).

HyperCity operates 19 big-box format stores span marquee locations of Mumbai, Hyderabad, Bengaluru, Bhopal, Ludhiana, Amritsar, Jaipur, Pune, Ahmedabad, Delhi, and Noida.

Future Retail would now be able to consolidate its position in Western India and complement hypermarket operations under Big Bazaar. The margins for Shoppers Stop will get a boost with this deal and help it to focus on its core retailing business i.e. apparel business.