“Reliance Retail, the largest retail chain in India, said on Sunday night that its proposed agreement to acquire the assets of the Future Group for a whopping $3.4 billion, against which Amazon has filed a legal proceeding, is fully enforceable under Indian law and expects to complete the transaction” without delay.
The firm of Mukesh Ambani released the declaration after Amazon won an emergency order earlier on Sunday from a Singapore arbitration court to temporarily stop the planned sale between the two Indian retail giants. The injunction would bar Future Group from selling its assets to Reliance Retail for around 90 days, according to a person familiar with the matter.
Earlier this month, the American e-commerce firm, which indirectly bought a 3.58 percent stake in the Future Retail company of Future Group last year, reached out to the Singapore International Arbitration Centre to block what could emerge as India’s largest retail transaction.
The agreement between Amazon and Future Retail gave the American e-commerce giant the first right to refuse to buy more stakes in Future Retail, the Indian company said at the time. Previous local media outlets have reported that a non-compete clause was also included in the deal between Amazon and Future Retail. Earlier this year, the two companies entered into an additional agreement that gave “long-term” rights to Amazon to market the goods of Future Community online.
In an intense battle to dominate the Indian retail market, Amazon, Walmart’s Flipkart, and Ambani’s Reliance Industries (which runs Reliance Retail), the most valuable business in India, are locked in.
An Amazon spokesman said in a statement that the company was “thankful for the order that grants all the relief that has been requested.” We remain committed to completing the arbitration process expeditiously. “The proceedings of the tribunal are scheduled to begin later this year.”
Future Group, which has yet to comment on Amazon’s objection, agreed with Reliance Industries because the company could not continue to navigate the losses caused to the company by the pandemic, its founder Kishore Biyani said earlier this month at a virtual conference.
It is uncertain at the moment if today’s injunction in India is enforceable. In fact, in a statement, a spokesman for Reliance Industry said that the transaction of Reliance Retail for the acquisition of assets and the company of Future Retail was conducted under “proper legal advice” and “rights and obligations under Indian law are completely enforceable.”
The spokesman for the retail giant, owned by Ambani, India’s richest man said that Reliance Retail “intends to implement its rights and complete the transaction in terms of the scheme and agreement with the Future community without any delay.”
With e-commerce only controlling about 3-7 percent of all retail sales in India and Reliance Retail launching its own e-commerce business to battle Amazon and Flipkart, many industry observers already see Amazon’s rumored future to deal with Reliance Retail as crucial for the future of the American e-commerce company in India. Seven years ago, Amazon, which began its journey to India, invested more than $6.5 billion in its local business in the region.
Established in 2006, through its nearly 12,000 physical stores in more than 6,500 cities and towns in the country, Reliance Retail serves more than 3.5 million customers weekly (as of early this year).
By selling around an 8.5% stake in its company to Silver Lake, Singapore’s GIC, General Atlantic, and others in the past two months, the retail chain, run by India’s richest man, Mukesh Ambani, has earned around $5.14 billion.