Mahindra & Mahindra (M&M) on Saturday said it would sell its franchise business to FirstCry for Rs 362.1 crore on a slump sale basis.
The move is expected to help FirstCry significantly expand its offline presence as well as strengthen its position as a leader in the babycare segment.
“A business transfer agreement has been executed by and between Mahindra Retail Pvt Ltd (MRPL), a subsidiary of the company, BrainBees Solutions Private Ltd and founder of FirstCry to transfer the franchise division of MRPL (BabyOye) as a going concern on a slump sale basis to FirstCry,” the company said in a filing to BSE.
“The total lump sum consideration for the transfer of the business is Rs 362.1 crore,” the filing said.
A statement said that Mahindra Retail will sell “its Franchise business to FirstCry, and operating all company stores under a FirstCry master franchisee agreement”. The combined entity will be called FirstCry.com – A FirstCry Mahindra Venture with a network of 300 stores spread across 125 cities.
“I believe that the future belongs to click and brick businesses, and that consolidation is the way to thrive and establish industry leadership. I am optimistic that this consolidation of the strengths that both groups bring to the partnership will result in a winning proposition,” said group chairman and managing director Anand Mahindra in a statement.
The company statement said: “In terms of the structure of the transaction, two companies have consolidated their operations, with Mahindra Retail selling its franchise business to FirstCry, and operating all company stores under a FirstCry master franchise agreement.”
The Board of Directors of the two companies have already approved this strategic move.
The baby and kids focused Omnichannel player additionally raised $34 million of new equity capital from the Mahindra Group, PE fund Adveq, Kris Gopalakrishnan and participation from all existing shareholders, it said.
“The merged entity will conduct its business under the brand name FirstCry.com – A FirstCry Mahindra Venture. It will have a parent base of over 4 million, a footprint of over 300 stores spread across 125 cities,” the statement said.
(With inputs from IANS)