Reliance Retail says it will acquire Future Group without delay

Darnell Taylor
October 26, 2020

"RRVL has entered into the transaction for acquisition of assets and business of Future Retail Limited under proper legal advice and the rights and obligations are fully enforceable under Indian Law", the Reliance Retail said in a statement.

The key reasons was Reliance issuing a hard-hitting response after e-commerce giant Amazon winning an interim award against its partner Future Group on Sunday. Amazon, which owns stake in a Future unit, and Reliance have in recent months made pacts with the Future Group, which they say are now being violated.

In August previous year, Amazon acquired a 49% stake in the Kishore Biyani-owned Future Coupons for around INR 1,500 Cr.

Reliance Industries and Future Group stocks fell on Monday after a Singapore arbitration panel put on hold Future Group's $3.38 billion asset sale to Reliance Industries, an interim win for Amazon.

"This was an emergency arbitration hearing, where they (Amazon) sought an interim stay on the merger so that the Future-Reliance deal doesn't close formally, while the matter is in global arbitration", a person aware of the development said.

Future Retail Limited (FRL) said it is examining the order and also clarified that it is not a party to the agreement under which Amazon has invoked arbitration proceedings. We are grateful for the order which grants all the reliefs that were sought.

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Confirming the development, an Amazon spokesperson said that the arbitration panel has granted the relief sought by it and expect an expeditious conclusion of the arbitration process.

Among individual stocks, Future Retail slipped 9 per cent to Rs 70.55 on the BSE in intra-day trade.

On August 30, Reliance Retail had acquired the retail, wholesale, logistics, and warehousing businesses of the Future Group for INR 24K Cr. According to a person familiar with the matter, the injunction will prevent Future Group from selling its assets to Reliance Retail by about 90 days.

Ambani and Jeff Bezos, two of the world's wealthiest men, want the stores and warehouses of Future Retail Ltd., which has penetrated Indian cities and small towns with sales of everything from grocery to fashion and electronics. Revenues of Reliance Retail in FY20 stood at Rs 1.63 lakh crore.

"Amazon is establishing itself as a reliable online retailer and to take their marketshare will need a huge effort from Reliance, which is not structured for online retail", said K.S. Raman, a Mumbai-based retail adviser to the Consumer Electronics & Appliances Manufacturing Association. The investments come as the country's retail sector prepares for the upcoming festival season and would help Reliance to launch an assault on rivals such as Walmart-owned Flipkart and Amazon.

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