Mumbai: Kishore Biyani-led Future Retail Ltd is set to acquire Shoppers Stop Ltd’s HyperCity for Rs700 crore, according to a report in The Economic Times.
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, the report said. The decision may be announced on Friday after Future Retail holds a board of directors meeting, the report said, quoting a source.
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 Rs84.73 crore in FY16-17 on revenues of Rs1,154.57 crore, as per annual report data.
HyperCity also has high debt, worth nearly Rs400 crore, even as its equity remains low at Rs11.45 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, said the report quoted above.
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.
However, in a recent interview with Mint, chairman and managing director of Future Retail Kishore Biyani had said he wants the company to focus on small stores, building a network under brand names Easyday and Heritage.