$3.4b Reliance-Future deal is ‘fully enforceable under law’
Reliance Retail intends to complete the deal "without any delay."
The $3.4 billion acquisition deal between Reliance Retail and Future Group is “fully enforceable under the Indian law” notwithstanding the emergency order won by Amazon from a Singapore arbitration court to temporarily halt the proposed sale, the two Indian retail giants said.
Reliance Retail, India’s largest retail chain owned by Asia’s richest tycoon Mukesh Ambani, said in a statement it intends to complete the deal, dubbed the largest retail acquisition transaction in India, “without any delay.”
In a statement to Indian stock exchanges on Monday Future Retail said that it was not a party to the agreement under which Amazon had invoked arbitration proceedings and the decision to sell the retail business to Reliance Industries was in compliance with the agreements signed with Amazon.
"Future Reliance Limited (FRL) is examining the communication and the order. It may be noted that FRL is not a party to the agreement under which Amazon has invoked arbitration proceedings," the statement read.
The injunction of the Singapore International Arbitration Centre won by American e-commerce group --- which indirectly bought a 3.58 per cent stake in Future Group’s Future Retail business in 2019 --- will prevent Future Group from selling its assets to Reliance Retail by about 90 days.
Amazon holds a 49 per cent stake in Future Coupons Pvt. Ltd, which in turn gives it a stake in Future Retail. The US e-commerce giant has thus dragged Future to arbitration after the firm signed a deal to sell its retail, wholesale, logistics, and warehousing units to Ambani's Reliance Industries Limited on August 29, 2020.
Amazon’s deal with Future Retail had given the US group the first right to refusal on purchase of more stakes in Future Retail, the Indian firm had said at the time.
According to sources, the agreement between Amazon and Future Retail also included a non-compete clause. The two companies entered an additional deal early this year that granted Amazon long-term rights to sell Future Group’s products online.
In a statement, Amazon said: “We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process.”
Shares in Future Retail were down 3.2 per cent by 0630 GMT, on MOnday while Reliance’s stock fell 2.4 per cent, weighing on the broader Mumbai market.
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