Future Group stocks in demand after CCI nods Amazon deal

Shares of six Future Group companies surged after the country's competition regulator approved Amazon's proposed acquisition of minority stake in Future Group.

Future Enterprises (up 16.25%), Future Retail (up 13.53%), Future Consumer (up 9.07%), Future Market Networks (up 4.85%), Future Supply Chain Solutions (up 2.70%) and Future Lifestyle Fashions (up 2.14%) advanced.

Meanwhile the S&P BSE Sensex was down 234.15 points or 0.57% to 40,896.02.

In a press released yesterday, the Competition Commission of India approved the acquisition by Amazon.com NV Investment Holdings LLC in Future Coupons (FCL).

The regulator further added that proposed combination pertains to the acquisition by Amazon of approximately 49% of the voting and non-voting equity shares of FCL. The proposed combination consists of certain other constituent steps involving FCL, Future Corporate Resources (FCRPL), and Future Retail (FRL).

On 22 August 2019, Future Retail said that Kishore Biyani, on behalf of the existing shareholders forming part of the promoter group and FCL, entered into a share subscription agreement and a shareholders' agreement with Amazon.Com NV Investment Holdings LLC.

As part of the agreement, Amazon has been granted a call option. This call option allows Amazon to acquire all or part of the promoters' shareholding in FRL, and is exercisable between the third to tenth years, in certain circumstances, subject to applicable law.

The promoters have also agreed to certain share transfer restrictions on their shares in the company for same tenure, including restrictions to not transfer shares to specified persons, a right of first offer in favour of Amazon, all of which are subject to mutually agreed exceptions (such as liquidity allowances and affiliate transfers).

Media reports suggested that Amazon and Future Group are now rolling out a joint business plan that will help the Kishore Biyani owned retailer to achieve $1-billion (about Rs 7,000 crore) of incremental revenue by 2021.

FCRPL is engaged in business of management consultancy services and trading in goods and services and also has investments in various Future Group of companies. FCL is principally engaged in marketing and distribution of corporate gift cards, loyalty cards and reward cards to corporate customers. FRL (and its subsidiaries) are active in the Indian retail market and currently operate multiple retail formats in hypermarkets, supermarkets and convenience storesunder various brand names.

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