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Foodworld to split: RPG and Dairy Farm International to part ways
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Monday, 16 May, 2005, 08 : 00 AM [IST]
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By A Correspondent, Mumbai
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Hong Kong based Diary Farm International, joint venture partner of RPG Enterprises in Foodworld Supermarket, has authorised DSP Merrill Lynch to find an Indian partner to buy RPG's 51 per cent stake in retail venture.
Of the 93 Foodworld stores, RPG will retain 48 and Dairy Farm International the remaining 45. Dairy Farm International will float a new company under which these stores will fall.
RPG's impending exit from Foodworld follows a series of disagreements the two partners had in the past, the prominent one being the fight over the brand name Giant under which RPG launched two discounted stores.
One of the early companies to invest in the Indian retail sector (1999), Dairy Farm had sued RPG Enterprises for alleged infringement of the Giant name, under which RPG has 3 discount stores. Diary Farm had claimed that it held the trademark rights for Giant in the Asia-Pacific region and would like to keep the option of setting up its own Giant stores open, as and when FDI is allowed in retail trade in India.
At a later stage, Dairy Farm will divest a 51 per cent stake in the new company to an Indian partner, as the government's current foreign direct investment policy does not allow an overseas company to have a majority stake in a retail chain.
Sources said Spencers, which holds a 51 per cent stake in Foodworld, will own the stores that will come under the RPG fold. They added that a public announcement would be made over the next three weeks once Dairy Farm roped in a partner.
Foodworld started as a division of Spencer & Co, a part of RPG Enterprises, in May 1996, and opened its first supermarket in Chennai. Three years later, Foodworld was hived off as a separate company in which Dairy Farm picked up a 49 per cent stake.
RPG is expected to invest the money it will get from selling the Foodworld brand in setting up more stores.
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