India approves Reliance’s $3.4 billion deal with Future Group, brings a new headache to Amazon

The Indian watchdog said on Friday it has approved the $3.4 billion deal between the nation’s two largest retail giants, Future Group and Reliance Retail, posing a new headache for American e-commerce group Amazon in the key overseas market.

The Competition Commission of India (CCI), the Indian watchdog, said in a brief statement that it had approved the proposed acquisition of retail, wholesale, logistics, and warehousing businesses of Future Group, India’s second largest retail chain, by Reliance Retail, the largest.

Reliance Retail and Future Group announced their proposed deal, worth $3.4 billion, in late August. Amazon, which owns a stake in a Future Group’s subsidiary, has protested the deal, alleging the Indian firm of engaging in insider trading and violating contracts.

Late last month, a Singapore arbitration court issued an order to temporarily halt the deal between the two Indian retail giants, but it has been unclear ever since how much water that order holds in India. Shortly after the court issued the order, Future Group and Reliance Retail said they were working to complete their deal “without any delay.”

Friday’s announcement is crucial. Amazon, which has invested over $6.5 billion in its India business, had requested the CCI and SEBI, the regulator of the securities and commodity market in India, to consider Singapore International Arbitration Centre’s order and block the deal.

Future Group is currently fighting with Amazon in a court in Delhi, where a lawyer for the Indian firm has used bizarre language to charge the American firm. On several occasions, the lawyer has likened Amazon’s effort to block Future Group’s deal to the East India Company, the British trading house whose arrival in India kicked off nearly 200 years of colonial rule.

Amazon did not immediately respond to a request for comment.

More to follow…

#amazon, #amazon-india, #asia, #ecommerce, #future-group, #government, #mukesh-ambani, #reliance, #reliance-retail

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Reliance says its $3.4 billion deal with Future Group ‘fully enforceable under Indian law’ despite Amazon winning an arbitration order

Reliance Retail, India’s largest retail chain, said on Sunday evening that its proposed deal to acquire Future Group’s assets for $3.4 billion — against which Amazon has filed a legal proceeding — is fully enforceable under the Indian law and it intends to complete the deal “without any delay.”

Mukesh Ambani’s firm issued the statement after Amazon won an emergency order from a Singapore arbitration panel to temporarily halt the proposed sale between the two Indian retail giants.

The American e-commerce group, which indirectly bought a 3.58% stake in Future Group’s Future Retail business last year, reached out to a Singapore arbitration panel over the multi-billion dollar proposed deal.

Amazon’s deal with Future Retail had given the American e-commerce giant the first right to refusal on purchase of more stakes in Future Retail, the Indian firm had said at the time. Amazon, Walmart’s Flipkart, and Reliance Industries, the most valuable firm in India, are locked in an intense battle to shape how hundreds of millions of Indians would shop in the future.

In a statement, an Amazon spokesperson said the company was “grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process.”

At the moment, it is unclear whether today’s injunction is enforceable in India. Indeed, in a statement, a Reliance Industry spokesperson said that Reliance Retail’s transaction for acquisition of assets and business of Future Retail were conducted under “proper legal advice” and the “rights and obligations are fully enforceable under Indian law.”

Reliance Retail “intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” the spokesperson added.

The legal proceeding in Singapore has come as a surprise to many in the industry, as Amazon is said to be preparing to acquire a multi-billion-dollar stake in Reliance Retail, according to earlier reports by ET Now and Bloomberg.

With e-commerce commanding only between 3 -7% of all retail sales in India — and Reliance Retail launching its own e-commerce business to fight Amazon and Flipkart — Amazon’s reported future deal with Reliance Retail is already been seen by many industry analysts as crucial for the American e-commerce firm’s future in India. Amazon, which kickstarted its journey in India seven years ago, has invested more than $6.5 billion in its local business in the country.

Founded in 2006, Reliance Retail serves more than 3.5 million customers each week (as of early this year) through its nearly 12,000 physical stores in more than 6,500 cities and towns in the country.

The retail chain, run by India’s richest man, Mukesh Ambani, has raised about $5.14 billion by selling about an 8.5% stake in its business to Silver Lake, Singapore’s GIC, General Atlantic and others in the past two months.

Ambani’s other venture, Jio Platforms, this year raised over $20 billion from more than a dozen marquee investors, including Google and Facebook.

 

#amazon, #asia, #ecommerce, #flipkart, #future-group, #india, #mukesh-ambani, #reliance-industries, #reliance-retail, #walmart

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Amazon sends legal notice to India’s Future Group over deal with Ambani’s Reliance Retail

Amazon has sent a legal notice to Future Retail, India’s second largest retail chain, for breaching the terms of its contract by selling a significant portion of the business to Ambani’s Reliance Retail.

Future Group announced in late August that it was selling its retail and wholesale business, as well as its logistics and warehousing business to Reliance Retail for $3.4 billion.

But before Reliance Retail came into the picture, Future Group and Amazon also had a deal.

Last year, Amazon acquired a 49% stake in Future Coupons, a group entity owned by Future Group’s retail business. The deal gave Amazon a 3.58% stake in Future Retail, and the right of first refusal to purchase more stake in Future Retail both directly as well as via entities, Future Group said in a filing at the time.

According to TV network ET Now, which first reported about the legal notice, the deal between Amazon and Future Retail also restricted the Indian firm from entering into a deal with certain firms.

Future Group, which kickstarted its journey as a stonewashed-fabric seller in the 1980s, served millions of customers through more than 1,500 stores in more than 400 cities as of earlier this year.

The legal notice has puzzled many in India, as Amazon is reportedly preparing to acquire a multi-billion-dollar stake in Reliance Retail, India’s largest retail chain, according to earlier reports by ET Now and Bloomberg.

With e-commerce commanding only between 3 to 7% of all retail sales in India — and Reliance Retail launching its own e-commerce business to fight Amazon and Flipkart — Amazon’s deal with Reliance Retail is seen as crucial for the American e-commerce firm’s future in India by many industry analysts. Amazon, which kickstarted its journey in India seven years ago, has invested over $6.5 billion in its local business in the country.

Amazon confirmed that it had filed a legal notice. Reliance Retail and Future Group did not comment. As of Wednesday midnight (local time), Future Group had not disclosed the notice on the stock exchange.

Founded in 2006, Reliance Retail serves more than 3.5 million customers each week (as of early this year) through its nearly 12,000 physical stores in more than 6,500 cities and towns in the country.

The retail chain, run by India’s richest man Mukesh Ambani, has raised about $5.14 billion by selling about an 8.5% stake in its business to Silver Lake, Singapore’s GIC, General Atlantic and others in the past four weeks.

Ambani’s other venture, Jio Platforms, this year raised over $20 billion from more than a dozen marquee investors including Google and Facebook.

#amazon, #amazon-india, #asia, #future-group, #india, #reliance-retail

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