In a bid to stall the Future Retail-Reliance Retail deal in India, e-commerce major Amazon has reportedly written to markets regulator Securities and Exchange Board of India (SEBI), the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), urging them not to approve the deal. Following this Reuters reported on Friday that BSE will consult SEBI about the deal and also seek clarifications from Future Retail and Reliance Industries before approving the deal.
On Sunday, Amazon had received a favourable ruling on its arbitration appeal in the Singapore International Arbitration Centre (SIAC), which passed an interim ruling stalling the Reliance and Future Retail deal. However, this interim ruling is not directly enforceable in India and will have to be ratified by an Indian court.
Amazon now approaching SEBI and the stock markets opens doors for a protracted legal tussle between both parties.
Kishore Biyani-led Future Group, in August, signed a deal with Reliance Industries to sell its retail, wholesale, and logistics businesses to Reliance Retail by way of a slump sale for Rs 24,713 crore. Two months later, Amazon, which has a 49% stake in Future Coupons, the promoter entity of Future Retail, filed a lawsuit against Future Group, alleging that the deal violated terms of its deal with Amazon and the non-compete agreement signed by both companies.
Amazon picked up a 49% stake in Future Coupons in August 2019, where it had the option to buy a partial or controlling stake in Future Retail, after three years and before 10 years from the date of the deal signing. However, this is subject to Foreign Direct Investment norms prevalent at the time. Current FDI norms don’t allow Amazon to buy a controlling stake in an Indian retail company.
Amazon has now alleged that its consent wasn’t taken before Future Group signed a deal with Reliance, and that Reliance is among the 30 companies listed by Amazon in the non-compete agreement that Future Group is barred from entering share-sale agreements with.
Future Group, on its part, has argued that Amazon’s deal is with Future Coupons and so Future Retail is not party to the arbitration. It has also said that the deal was signed with full legal advice, and that it intends to go ahead with the same. It argued during the arbitration hearing that if the deal with Reliance falls through, Future Retail could go into liquidation, putting livelihoods of its thousands of employees at risk.
However, Future Group doesn’t intend to challenge SIAC’s ruling, and would wait for Amazon to approach Indian courts to ratify the same.
Meanwhile, Reliance Industries too, has indicated that it intends to enforce its legal rights over the deal and ensure it does through without delay.
“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” the company said in a statement.