Setback for Amazon as India’s regulator approves $3.4b Reliance-Future deal

Global e-commerce leader Amazon suffered a major setback in its attempt to block the $3.4 billion deal between India’s retail giants Reliance Retail and Future Group with the securities regulator giving its approval for the contentious transaction.

The Bombay Stock Exchange said in a notification on Wednesday that it had spoken with India’s markets regulator, the Securities and Exchange Board of India (SEBI), and had no objection or adverse observation on the deal.

BSE’s notification is the latest setback for Amazon, which had written to SEBI and Indian antitrust watchdog to block the multi-billion deal between Future and Reliance.

“We hereby advise that we have no adverse observations with limited reference to those matters having a bearing on listing/de-listing/continuous listing requirements within the provisions of Listing Agreement, so as to enable the company to file the scheme with NCLT [National Company Law Tribunal],” the notification read. Sebi has advised Future to share various aspects of its ongoing litigation with Amazon to NCLT, whose approval for the deal is pending.

Last month, the Delhi High Court dismissed a plea from Future Group that sought to restrain Amazon from interfering in the asset sale to Reliance.

Future sold its retail assets in August to Reliance in a deal Amazon said breached agreements Future made with the US ecommerce leader in 2019. As per the agreement, Amazon bought 49 per cent in one of Future’s unlisted firm in a deal that was valued at over $100 million. As part of the deal, Future could not have sold assets to rivals, Amazon has said in court filings.

In October, Amazon had won an injunction to halt the sale from a Singapore arbitrator that the sides had agreed to use in case of dispute.

Future later said the order was not binding, prompting Amazon to lodge a complaint with SEBI.

An Amazon spokesperson said that the Seattle-based firm tech giant will continue to pursue legal remedies. “The letters issued by BSE clearly state that the comments of SEBI on the ‘draft scheme of arrangement’ (proposed transaction) are subject to the outcome of the ongoing Arbitration and any other legal proceedings. We will continue to pursue our legal remedies to enforce our rights,” the spokesperson said.

At stake is India’s retail market that is estimated to balloon to $1.3 trillion by 2025, up from $700 billion in 2019, according to consultancy firm BCG and local trade group Retailers’ Association India. Online shopping accounts for about 3.0 per cent of all retail in India.

Data from Forrester Research shows that the key battle in the booming retail sector is over groceries, likely to be worth around Rs54 trillion a year by 2024.

Reliance and Future dominate the market in India, followed by Avenue Supermarts's DMart in the third place. — issacohn@khaleejtimes.com