A worker arranges food packets inside a retail store in Kolkata.Reuters

India's largest store-based retail brand Future Group is all set to acquire grocery retailer HyperCity — a Shoppers Stop subsidiary — for Rs 700 crore.

The deal is expected to combine cash and shares of Future Retail to be given to shareholders of HyperCity, according to an Economic Times report.

"Both sides have been in negotiations for a while. The acquisition will give Big Bazaar access to a premium brand and great locations in metros. It will complement Future Retail's hypermarket operations under Big Bazaar," an official aware of the development told ET on condition of anonymity.

Kishore Biyani-led Future Retail has already acquired four major retail brands. Hypercity will become the fifth in Biyani's kitty.

Future Retail scaled up its presence in the northern part of the country with acquisitions of Bharti Retail and Big Apple, while it acquired Nilgiri and Heritage to expand its footprint down south. This deal is aimed at consolidating the Future Group footprint in the western part of the country.

The brick-and-mortar retail giant is aggressively adding stores to meet the revenue target of Rs 75,000 crore to Rs 1 lakh crore by 2021. Big Bazaar is Future's flagship brand with 259 stores in 124 cities.

Quoting data furnished by Euromonitor, ET reported that Big Bazaar is currently India's market leader in organised store-based retail market, with a 22.4 percent market share.

With the acquisitions of Hypercity, Future Retail's total store numbers will now be raised to 900 across India.

HyperCity is a high-end grocery and general merchandise retail chain, which has 19 stores in marquee locations like Mumbai, Bangalore and Hyderabad. The company incurred losses worth Rs 84.73 crore in financial year 2017 on revenues of Rs 1,154.57 crore, as per annual report data, ET reported.

HyperCity currently has debt of around Rs 546.87 crore, and with the new deal a part of this debt will be transferred to the Future Group.

Through the deal, the Future Group will add about 1.4 million square feet of retail space. Currently, the firm is present in 221 cities, with annual sales of Rs 17,075 crore.