A year after acquiring online maternity and childcare brand BabyOye, Mahindra & Mahindra (M&M) on Saturday said it will sell its franchise business to competitor FirstCry for Rs 362.1 crore on a slump sale basis and also invest in it.

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"A business transfer agreement has been executed by and between Mahindra Retail Pvt Ltd (MRPL), a subsidiary of the company, Brainbees Solutions (FirstCry) and founder of FirstCry to transfer the franchise division of MRPL (BabyOye) as a going concern on a slump sale basis to FirstCry," M&M said in a BSE filing.

The total lump sum consideration for the transfer of the business is Rs 362.1 crore, it added.

The Board of Directors of the two companies have already approved this strategic move.

Elaborating on the agreement, the company said, "In terms of the structure of the transaction, Mahindra Retail and FirstCry have consolidated their operations, with Mahindra Retail selling its franchise business to FirstCry, and operating all company stores under a FirstCry master franchise agreement".

"FirstCry additionally raises $34 million (approximately Rs 226 crore) of new equity capital from the Mahindra Group, PE fund Adveq, Kris Gopalakrishnan and participation from all existing shareholders," it said.

Mahindra Retail has over 120 stores across the country operating under the 'BabyOye' by Mahindra brand.

"The  merged entity will conduct its business under the brand name FirstCry.com - A FirstCry Mahindra Venture. FirstCry.com will have a parent base of over 4 million, a footprint of over 300 stores spread across 125 cities," it added.

FirstCry was founded by successful serial entrepreneur Supam Maheshwari, who had previously built and successfully sold Brainvisa Technologies. He will continue as the chief executive officer of the combined entity FirstCry.

Mahindra Retail acquired Babyoye.Com in February 2015.