For the sum of Rs. 2,850 crore, Reliance Industries Ltd. will purchase the wholesale business of Metro AG in India.
Reliance Industries Ltd., the conglomerate led by billionaire Mukesh Ambani, will pay 2,850 crore to acquire the wholesale business of German company Metro AG in India as it looks to further consolidate its position as the market leader in the country’s enormous retail market.
Reliance Retail Ventures Limited (RRVL), a Reliance Industries Ltd. subsidiary, “signed today definitive agreements to acquire a 100% equity investment in Metro Cash & Carry India for a total cash consideration of 2,850 crore, subject to closing adjustments,” stated a joint statement.
With this acquisition, Reliance Retail will gain access to a network of Metro India stores in prime locations throughout important cities, as well as a sizable base of registered kiranas and other institutional customers and a solid supplier network. The acquisition will further strengthen Reliance Retail’s physical store footprint and ability to better serve customers and small businesses by utilising synergies and efficiencies across supply chain networks, technology, and other factors “t said.
The transaction is scheduled to close by March 2023, subject to a few regulatory requirements and other usual closing conditions.
Isha Ambani, director of RRVL, commented on the move, stating that “the acquisition of Metro India matches with our new commerce strategy of developing a unique model of shared prosperity through active partnership with small merchants and enterprises.” A major force in the Indian B2B industry, Metro India has created a solid multi-channel platform that offers a superior customer experience.
“We think that Metro India’s robust assets and our in-depth knowledge of the Indian merchant and kirana ecosystem would enable us provide a unique value proposition to the country’s small companies,” she continued.
According to Metro AG CEO Steffen Greubel: “We are offering Metro India as a sale of a profitable and expanding wholesale company in a fast-moving market. We are certain that Reliance would be an effective partner in guiding Metro India into the future in current market climate.” With over 16,600 outlets, Reliance is the largest brick-and-mortar retailer in India. A strong wholesale unit would enhance the company’s activities in India.
In 34 countries, Metro is a premier specialist in wholesale and food retail.
According to the company’s website, Metro Cash & Carry, its wholesale division, began doing business in India in 2003 and now runs 31 wholesale distribution centres there that cater primarily to business customers.
Its customers include hotels, restaurants, offices, small businesses, Kirana stores, and general retailers as well as consumers of regular groceries, electronics, household goods, and clothing. It also offers clothing to consumers.
Reliance Retail, the retail division of the oil-to-telecom conglomerate, with 18 billion dollars in annual revenue and is rated 56th among the world’s biggest retailers.
Only South Korea’s Coupang has a faster rate of growth in the retail sector than it does.
60 lakh crores are spent on retail in India, 60% of which is spent on food and groceries. 12 percent of the whole retail industry is anticipated to be organised retail.
In the organised food and grocery sector, Reliance already holds a 20% market share and has roughly three times as many stores as its closest rival, “More.”
It entered the FMCG market this month with the launch of the “Independence” brand, which will compete with companies like ITC, Tata Consumer Products Ltd., Patanjali, and Adani Wilmar for staples, processed foods, beverages, and other everyday necessities.
Multinationals like Carrefour have left the country because the B2B market is thought to have low margins.
In contrast, Walmart India Pvt Ltd, which runs the Best Price cash-and-carry business, has been 100% owned by e-commerce giant Flipkart Group.
Retailers, including Siam Makro, which runs the Lots Wholesale cash and carry trade business under the moniker LOTS Wholesale Solutions, were also vying to acquire the Metro Cash & Carry company.
With six wholesale distribution centres in Bangalore, four in Hyderabad, two each in Mumbai and Delhi, and one in each of the following cities: Kolkata, Jaipur, Jalandhar, Zirakpur, Amritsar, Ahmedabad, Surat, Indore, Lucknow, Meerut, Nasik, Ghaziabad, Tumakuru, Vijayawada, Visakhapatnam, Guntur, and Hubballi.
The holding company for all the retail businesses in the RIL group, RRVL, owns Reliance Retail as a subsidiary.
An earlier plan to buy the retail division of the Kishore Biyani-led Future group was announced by Reliance in August 2020 for a price of 24,713 crore. 19 Future group businesses that are involved in logistics, warehousing, retail, and wholesale were to be acquired as part of the agreement.