Future Group over Amazon's legal notice goes for ADR
Online retailer giant Amazon.com Inc (Amazon) has issued a legal notice on Future Group, alleging that Future Group's Rs. 24,713 crore asset sale to Reliance Industries violated an agreement with the Amazon.
According to an Amazon official, the company has initiated steps to enforce its contractual rights.
Last year Amazon bought a 49% stake in Future Coupons Ltd., with the right to buy into flagship Future Retail after a period between 3 and 10 years. Future Coupons owns a 7.3% stake in Future Retail. The Kishore Biyani-led group concluded a deal with Reliance in August 2020 by which Future Group would sell its retail, wholesale, logistics and warehousing units to Reliance although the deal is awaiting regulatory approvals.
According to Future Group official, the company intends to settle the matter with Amazon amicably, either through mediation or arbitration.
According to sources, Future Group had made an offer to Amazon, along with other potential buyers, and the deal with billionaire Mukesh Ambani-led RIL was signed only after Amazon declined it. Moreover, as per Amazon's contract with Future Coupons, the US entity has first right to invest in Future Retail after three years and before ten years.
The development comes at a time when Reliance Retail Ventures Ltd - run by Mukesh Ambani - has been on a fund raising spree, bringing in over Rs. 37,700 crore from global investors. The investments equip Reliance Retail with funds to compete in both offline and online formats. The investments come as the country's retail sector prepares for the upcoming festive season and would help Reliance to launch an assault on rivals such as Walmart-owned Flipkart and Amazon.