You are here: Home » Companies » News
Business Standard

Future Group to go for mediation over Amazon's legal notice on RIL deal

Amazon.com Inc has slapped a legal notice on Future Group, alleging that the retailer's Rs 24,713 crore asset sale to Reliance Industries violated an agreement with the e-commerce giant

Topics
Future Group | Amazon | RIL

Press Trust of India  |  New Delhi 

e-commerce, digital, online, amazon, flipkart

US online retailer com Inc has slapped a legal notice on Future Group, alleging that the retailer's Rs 24,713 crore asset sale to Reliance Industries violated an agreement with the e-commerce giant.

"We have initiated steps to enforce our contractual rights," a spokesperson for the Seattle-based e-commerce giant said. "As the matter is sub-judice, we can't provide details."

last year bought a 49 per cent stake in one of Future's unlisted firms, Future Coupons Ltd, with the right to buy into flagship Future Retail after a period between 3 and 10 years. Future Coupons owns a 7.3 per cent stake in Future Retail.

In August this year, Future reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.

The deal is awaiting regulatory approvals.


ALSO READ: Acquisition of Future Group to strengthen RIL's retail footprint: Moody's

A source who is advising in this matter told PTI that Future Coupons received the notice from

The person added that the Kishore Biyani-led group intends to settle this matter amicably, either through mediation or arbitration.

E-mail send to Reliance Industries Ltd (RIL) and did not solicit any response.

The development comes at a time when Reliance Retail Ventures Ltd - run by India's richest man Mukesh Ambani - has been on a fund raising spree, bringing in well over Rs 37,700 crore in less than four weeks from global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA.

Reliance Retail's network spans supermarkets, consumer electronics chain stores, cash and carry wholesale business, fast-fashion outlets and online grocery store, JioMart. It has a presence in nearly 7,000 towns, with 640 million footfalls across core categories of grocery, consumer electronics and apparel.

The investments equip Reliance Retail with funds to compete in both offline and online formats. The investments come as the country's retail sector prepares for the upcoming festive season and would help Reliance to launch an assault on rivals such as Walmart-owned Flipkart and Amazon.

The source also pointed out that had made an offer to Amazon, along with other potential buyers, and the deal with billionaire Mukesh Ambani-led was signed only after the e-commerce behemoth declined it.

Moreover, as per Amazon's contract with Future Coupons, the US entity has first right to invest in Future Retail after three years and before ten years.

The deal with Amazon was also conditional based on the government's FDI policy permitting foreign multi-brand retailing firm. Given that there is no policy, they can't invest, the source said adding Amazon is raising this issue almost a month after the announcement of the deal with Reliance.

ALSO READ: Reliance Retail-Future Group deal: Traders worried over retail mkt monopoly

In August this year, Future Group had announced selling its retail, wholesale, logistics and warehousing businesses to Reliance Retail Ventures Ltd (RRVL) - which operates the retail business of - on a going concern basis for Rs 24,713 crore.

Future Enterprises will subsequently sell by way of a slump sale the retail and wholesale business that includes key formats such as Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of RRVL, a Future Group statement had said on August 29.

It will also sell the logistics and warehouse business to RRVL by way of a slump sale, it had added.

In August 2019, Future Retail had informed stock exchanges that Amazon.Com NV Investment Holdings LLC would acquire 49 per cent stake in Future Coupons from their promoters, led by Kishore Biyani, for an undisclosed amount.

At that time Future Coupons held 7.3 per cent stake in Future Retail. As part of the agreement, Amazon was also granted a call option, which allowed the US e-commerce major an option to acquire all or part of the promoter's shareholding between the third and tenth year.

Amazon also has a stake in other retail chains in the country Shoppers Stop and More.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, October 08 2020. 15:01 IST
RECOMMENDED FOR YOU
.