Kishore Biyani led Future Retail
Ltd is set to acquire Shoppers Stop Ltd HyperCity for Rs 700 crore. The deal is
expected to combine cash and shares of Future Retail to be given to
shareholders of HyperCity, a subsidiary of the listed Shoppers Stop.
HyperCity, a network of high-end
grocery and general merchandise retail chain, has yet to turn profitable. It
operates 19 stores over a 1.34 million square feet area, according to an
investor presentation by Shoppers Stop for the quarter ended June 2017. The
company made losses worth Rs 84.73 crore in FY16-17 on revenues of Rs 1,154.57
crore, as per annual report data.
HyperCity
also has high debt, worth nearly Rs 400 crore, even as its equity remains low at
Rs 11.45 crore, according to data from its latest annual report for FY16-17.
However, the company might transfer a part of this debt to Future Group with
this sale.
Meanwhile,
Future Retail, that owns four major retail brands, will find HyperCity sit
somewhere between its existing Big Bazaar departmental store network and
Foodhall, a premium upscale gourmet store. It is unclear how HyperCity will be
integrated in Future Retail’s clearly defined networks. Big Bazaar has 235
stores in India which have been undergoing an upgrade from a go-to destination
for discounts to a lifestyle departmental store.
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