Shares of Future Retail plunged 8 percent in early trade on August 23 after the company said Amazon will acquire 49 percent stake in Future Coupons.
The proposed transaction size and per share value of FRL has not been disclosed yet
Future Coupons is a Future Group entity that holds a 7.3 percent stake in Future Retail. Future Retails owns entities such as Big Bazaar, among others.
"Amazon has agreed to make an equity investment in Future Coupons for acquiring a 49 percent stake comprising both, voting and non-voting shares," Future Retail said in a release to the exchange.
Also Read - Amazon acquires 49% stake in Future Coupons
As part of the agreement, Amazon has been granted a call option. This call option allows Amazon to acquire all or part of the promoters' shareholding in Future Retail and is exercisable between the third and tenth years, in certain circumstances, subject to applicable law, the company said.
Morgan Stanley has maintained overweight call on the stock with a target at 660 per share.
The research firm feels that transaction would be at a 'significant' premium to the warrant issue price of Rs 505 per share, while calculation suggests that the Amazon may acquire 3.6-4.8 percent in FRL at a 40-87 percent premium.
It expects Amazon to adopt the hybrid retail model in India and see FRL being the preferred partner for Amazon's grocery business.
At 0934 hrs, Future Retail was quoting at Rs 386.60, down Rs 26.85, or 6.49 percent on the BSE.
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