Future group stocks under pressure as deal with Reliance put on hold

Andrew Cummings
October 26, 2020

Reliance Retail on Sunday said that it intends to enforce its rights and complete the transaction in terms of the agreement with Future Group after Amazon.com was awarded relief by a Singapore-based arbitration panel against Kishore Biyani-owned group company for its deal with Reliance Retail Ventures Ltd (RRVL).

Meanwhile, RIL retail arm Reliance Retail Ventures Limited (RRVL) has said it intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay. It said that the company has received a communication from the Singapore International Arbitration Centre (SIAC), enclosing an interim order of the Emergency Arbitrator in the arbitration proceedings under shareholders' agreement between Amazon, Future Coupons Private Limited and the promoter group.

In a statement issued late Sunday (Oct 25) in Mumbai, the United States e-commerce giant said it got all the relief it sought, without providing specifics.

Amazon agreed to purchase 49 per cent of one of Future's unlisted firms last year, with the right to buy into their flagship, Future Retail, after a period of between three and 10 years.

"We welcome the award of the Emergency Arbitrator", Amazon said.

The deal would have helped Reliance nearly double its footprint as India's largest retailer. It may be noted that FRL is not a party to the agreement under which Amazon has invoked arbitration proceedings, it said.

"If Future-RIL decide to go ahead with the deal within the next 90 days, Amazon will challenge and seek enforcement of the arbitration order", sources said.

According to the contract signed between Amazon and Future, the sale of the business to rivals (Reliance) is barred.

On August 30, Reliance Retail had acquired the retail, wholesale, logistics, and warehousing businesses of the Future Group for INR 24K Cr.

India's richest businessman Mukesh Ambani has suddenly become a topic of intense conversations on the internet. "We remain committed to an expeditious conclusion of the arbitration process", the Amazon spokesperson was quoted as saying. But that transaction didn't materialize in time for Future, seeing it instead cut a deal with Mr Ambani's refining-to-retail conglomerate. Earlier local media reports have claimed that the agreement between Amazon and Future Retail also included a non-compete clause. Comparatively, Reliance Retail operates in almost 12K stores across 6,600 towns and cities, covering an area of 28.7 Mn square feet.

Future Group was not immediately reachable for comment.

In the last couple of months, Reliance Retail has been attracting investments from several companies, some of which have previously invested in Reliance's digital venture Jio Platforms as well. The development comes even as Reliance Industries has applied for a clearance with the Competition Commission of India (CCI) on its deal with Future Group.

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