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Rediff.com  » Business » Tata to buy RPG pie in Foodworld

Tata to buy RPG pie in Foodworld

By Indrajit Gupta & M Rajshekhar in Mumbai
Last updated on: May 06, 2005 15:52 IST
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The ownership of Foodworld, one of the first supermarket chains in the country, is about to change hands. After six months of hectic negotiations, the RP Goenka group is about to part ways with Dairy Farm International, its joint venture partner in Foodworld Supermarkets.

As part of the deal, the Tata group will pick up RPG's 51 per cent stake in the supermarket chain, says Businessworld. RPG and DFI will also divide the 93 Foodworld stores among them. RPG will retain the properties in Chennai, Hyderabad, Pune and the flagship store in Bangalore, while DFI will get all the rest.The Health & Glow stores will also go to DFI.

The familiar red-and-white Foodworld shingle will continue to hang outside the stores that go to DFI, while the stores with the RPG group will be renamed Spencer's.

For the past few years, the joint venture had soured. Sources say that DFI was miffed that RPG was not investing sufficiently in the venture to scale up operations. Later, when the RPG group launched the Giant hypermarket in 2001, DFI had expected to get a stake in the venture, but it didn't.

Finally, the two parties decided to part ways. But the deal was initially held up as the Goenkas had asked for a 'high' valuation for their stake in the Rs 300-odd-crore (Rs 3 billion) venture. Sources say that the two have resolved the differences since and the deal has been closed. However, no formal announcement has been made because DFI is yet to ink its joint venture with the Tata group.

Interestingly, Trent, the Noel Tata firm that owns the Westside stores, has officially denied that it is in talks to pick up RPG's stake in Foodworld.

The Tata group could have decided to step into the breach to preserve its historical ties with DFI's parent, the Jardine Matheson group, with which it had the Concorde Motors JV till 2002.

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