Future Coupons, a promoter group entity of Future Retail has received Rs 1,500 crore from Amazon for 49 percent stake in the company.
The Competition Commission of India (CCI) gave Amazon approval to acquire stake in Future Coupons in November 2019.
“The proposed combination pertains to the acquisition by the acquirer (Amazon.com NV Investment Holdings) of approximately 49 percent of the voting and non-voting equity shares of the target (Future Coupons Ltd),” CCI said in its order.
Future Coupons holds 7.3 percent stake in the Future Retail. This means that Amazon will effectively hold 3.58 percent indirectly in Future Retail.
The promoters of Future Group entered into an agreement with Amazon in August 2019. As per the deal, Amazon agreed to buy 49 percent stake in Future Coupons and was also granted a call option.
This option allows Amazon to acquire all or part of the promoter’s shareholding in Future Retail if permitted by law. This call option is exercisable between the third and tenth years.
Future Group is likely to use funds from Amazon to pare debt. Future Retail’s current debt has been estimated in the range of about Rs 3,000 – 3,500 crore.
Future Retail, which runs Big Bazaar, FBB, Foodhall, Easyday Club and Heritage Fresh, has been working on improving operational efficiencies at the company level. This deal with Amazon could be a win-win for both the companies.
For Future Group, it will mean a larger online presence. Amazon has already started stocking Future Group products on its ecommerce portal and more categories are likely to be added going forward. The deal will give Amazon entry into the offline retail space.
Future Group is already planning for Amazon kiosks to be set up in stores in a phased manner. Through this partnership, the companies are targeting revenues of $1 billion over the next 2-3 years, said sources.