This could be the mother of all retail deals in a while

The Big Bs of Indian retail market, Bharti Retail and Kishori Biyani are teaming together reveals an The Economic Times report. It states that Bharti Retail and Kishore Biyani-led Future Group are eyeing a merger of their retail businesses, in what could lead to the biggest consolidation in the sector by a wide margin.

The plan involves the larger Future Group absorbing Bharti Retail in a largely stock deal. After this, the promoters of Bharti Retail — brothers Sunil, Rakesh and Rajan Mittal — are expected to get a minority stake in the combined entity or in one of the Biyani-promoted entities that controls his businesses.. The swap ratio and other key details are yet to be worked out, they said. One of them said due diligence is expected to be completed by end-May.

In the past three years, Biyani has streamlined his retail empire into three separately listed entities — Future Retail Ltd, Future Consumer Enterprises Ltd and Future Lifestyle Fashion, an apparel retailing company. The hyper and supermarkets — food and grocery retail chains Big Bazaar, Food Bazaar and Food Hall — are included in listed flagship Future Retail. The convenience stores — Nilgiris, KB's Conveniently Yours, Big Apple and Aadhaar — are part of Future Consumer, also listed.

Future Consumer also owns food parks and more than three dozen FMCG brands.

This move highlights promoters’ willingness to take bold, strategic steps at a time when the profitability of large retail chains across the country continues to remain under pressure due to higher overhead expenses such as rentals and low product margins.

Bharti Group doesn't comment on market speculation, a spokesperson told ET. Kishore Biyani, group CEO of Future Group, denied that any merger talks between the two were taking place. "Nothing like that is happening," he told the financial daily over the phone.

Bharti Retail, a wholly-owned subsidiary of Bharti Enterprises, runs a chain of 216 hypermarkets, convenience stores and supermarkets under the Easyday brand, concentrated in the northern region with a few in the South and West. After Bharti broke off its partnership with Walmart in late 2013, the retail business is not a core activity for the telecom-to-financial services conglomerate, analysts told the financial daily.

(Image: India Times)