In order to further solidify its hegemonic position in India’s enormous retail market, Mukesh Ambani’s conglomerate Reliance Industries will invest Rs 2,850 crore to acquire wholesale operations in India of German company Metro AG.
A joint statement issued on Thursday informed that definitive agreements were signed for Reliance Retail Ventures (RRVL), a division of Reliance Industries, to purchase a 100 per cent equity share in Metro Cash and Carry India, for an aggregate cash consideration of 2,850 crore.
Reliance Retail is a division of RRVL, the holding company for all of the RIL group’s retail businesses. For the year ending 31 March, 2022, RRVL reported a consolidated turnover of almost 2 lakh crore.
Commenting on the acquisition, Isha Ambani, RRVL Director said that with Metro India, the company intends to align their new commerce strategy with the commitment to create a model of shared prosperity through active collaboration with small businesses and entrepreneurs.
She added that together with a thorough understanding of the Indian merchants and kirana ecosystem, Metro India’s assets will provide small businesses with a differentiated value proposition.
With the completion of this deal, Reliance Retail will have access to a network of Metro India stores in prominent areas of significant cities, as well as a sizable client base of registered kiranas and other institutional customers, a solid supplier network, and several other advantages.
It further said that by acquiring this company, Reliance Retail will further enhance its physical store network and provide small business and consumer solutions through the effective integration of supply chain networks, technology platforms, and sourcing capabilities.
The transaction is expected to close by March 2023, subject to certain regulatory requirements.
Metro AG CEO Steffen Greubel said that with Metro India, they are offering a lucrative and expanding wholesale operation in a rapidly changing market. They are certain that in Reliance, they have discovered a reliable business partner with the ability and willingness to successfully guide Metro India into the future in this competitive market.
Metro Cash & Carry, its wholesale division, entered India in 2003 and runs 31 wholesale distribution centres throughout the nation that only cater to corporate customers. It offers commodities like fruits and vegetables, regular foods, electronics, and home furnishings.
The company sells products such as fruits and vegetables, general groceries, electronics, household goods and clothing to customers including hotels, restaurants, offices, businesses, small retailers, and kirana stores.
With 18 billion dollars in revenue, the retail division of the oil-to-telecom conglomerate, Reliance Retail, is rated 56th among the world’s largest retailers. After South Korea’s Coupang, it is the second-fastest-growing retail company in the world.
60 per cent of the Indian retail business, worth 60 lakh crore, is made up of the food and grocery sector. It is expected that organised retail will account for 12 per cent of the whole retail market. Reliance already holds a 20 per cent market share in the organised food and grocery sector and has roughly three times as many stores as its closest rival, “More.”
Others in the race to acquire Metro’s business included Siam Makro, which runs Lots Wholesale cash and carry trading business under the brand name LOTS Wholesale Solutions.