Kishore Biyani-led Future Retail has said its board of directors has approved the acquisition of Heritage Foods’s retail and allied businesses, promoted by the family of Andhra Pradesh chief minister N Chandrababu Naidu.
“On closure of the transaction, Heritage Foods will own 3.65% of shareholding in Future Retail through fresh issuance of shares by the company,” Biyani, CMD, said on Monday. The enterprise valuation of Heritage’s retail business is estimated to be R295 crore, he added.
The retail business of Heritage Foods includes a chain of 124 stores in Hyderabad, Bengaluru and Chennai. These small format stores will compliment with Future Retail’s existing network of 379 small format stores, the company said.
As part of the scheme of arrangement for the acquisition, Heritage Foods will spin off its retail, bakery, agri-sourcing and veterinary care in a fully-owned subsidiary. Subsequently, all business, except veterinary care, will be merged with Future Retail, subject to approvals by shareholders of the company.
“We are happy to have found a partner in Future Group to expand our retail business, as Heritage Foods continues to focus and expand its diary and renewables energy business. Heritage stores are now part of a larger retail network and will benefit from economies of scale and supplier relationships that are critical in modern retailing,” N Brahmani, executive director, Heritage Foods, said.