Future Group acquires Nilgiris grocery chain for about Rs 300 crore
Future Group has acquired the century-old Nilgiris grocery chain for about Rs 300 crore in an all-cash deal that will give Kishore Biyani much-needed access to markets in the southern states. The deal also marks the exit of majority stakeholder, private equity firm Actis Capital.
According to the deal announced on Friday, Future Group will own all of Nilgiris. This includes the 65% stake of Actis Capital and that held by the Mudaliar family. ET had reported in April that Future Group was close to acquiring Nilgiris for Rs 275-300 crore.
For the past two years, Actis has been looking for an exit from Nilgiris Dairy Farm, a brand that was established in 1905. The UK-based PE firm had spent about $65 million to purchase the stake in 2006.
Actis May Have Taken $34-million Hit
Based on the purchase price, it may have taken a hit of about $34 million on its investment in the Bengaluru-based company. An Actis spokesperson declined to comment.
Since India didn't allow any kind of foreign investment in so-called multi-brand retailing at the time of the investment, Actis had purchased a controlling stake in a back-end holding entity. The holding company in turn franchised the Nilgiris branded chain of stores to the Mudaliar family to operate.
Biyani, eyeing Nilgiris for a year, said he's happy to buy an iconic brand. In addition to its network of 140 outlets in Karnataka, Kerala, Andhra Pradesh and Tamil Nadu, the company's portfolio of consumer brands will complement Future Group's ambitious FMCG venture.
"They have three things which are bigdairy, bakery and chocolate. Now, FMCG is very important for us and we can leverage their brands into our stores and our brands into their stores," Biyani said. In addition to the stores, Biyani also gets Nilgiris' robust backend operations including procurement centres, logistics and IT as well as a fleet of vehicles, including refrigerated trucks.
Biyani said the acquisition of the 109-year-old Nilgiris brand - made through FMCG unit Future Consumers Enterprise Ltd - will bolster the company's presence in south India, especially in Tamil Nadu. "We are not strong in Tamil Nadu. This is a big entry for us in Tamil Nadu." Almost 70% of Nilgiris stores are franchisee-run.