Billionaire Mukesh Ambani-led petrochemical giant Reliance Industries (RIL) has offered to buyout shareholders of the unlisted retail arm Reliance Retail.
The proposed scheme values the retailer almost double the value of its closest competitor Radhakrishnan Damani-led D’Mart.
As per the proposed scheme, Reliance Retail shareholders will get one share of RIL in exchange for four shares of Reliance Retail.
The swap ratio values the retail business at Rs 2.5 lakh crore.
The scheme will be applicable to Reliance Retail employees, who were allotted shares, or restricted stock units, under various employee stock option plans.
This arrangement will help enhance liquidity as employees will own shares that can be traded on a stock exchange.
Reliance Retail shares started trading in the unlisted market in June, between Rs 475 and Rs 500 apiece, fetching the retailing arm a business value of Rs 2.5 – 2.75 lakh crore.
That’s slightly lower than ITC’s current valuation, and double the value of Avenue Supermarts, which runs the D-Mart chain.
RIL was planning to list Reliance Retail on the stock exchanges by 2024.
The retail arm started its operations in 2006 with a grocery store, and the company has since spent Rs 14,000 crore on the business.
It has built a network of 10,644 stores across grocery, lifestyle, apparel and electronic formats, with 2,829 outlets opening in the previous financial year.
Last year, Reliance Retail logged net sales of Rs 1.3 lakh crore, with Ebitda (earnings before interest, taxes, depreciation, and amortization) at Rs 6,201 crore.
Longer-term this deal will add rich long term value to reliance industries shareholders as going ahead there is huge scope for scaling up the retailing business ahead.
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