“We have initiated steps to enforce our contractual rights,” said a spokesman for the Seattle-based e-commerce giant. “As the matter is under trial, we cannot provide details.”
Last year, Amazon bought a 49% stake in one of Future’s unlisted companies, Future Coupons Ltd, with the right to buy into the flagship Future Retail after a period of 3-10 years. Future Coupons owns a 7.3% stake in Future Retail.
In August this year, Future reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance.
The deal is awaiting regulatory approvals.
A source advising Future Group on this matter told PTI that Future Coupons received the notice from Amazon.
The person added that the group led by Kishore Biyani intends to resolve this matter amicably, either through mediation or arbitration.
The email sent to Reliance Industries Ltd (RIL) and Future Group did not request a response.
The development comes at a time when Reliance Retail Ventures Ltd, led by India’s richest man Mukesh Ambani, has been on a fundraising spree, bringing in more than ₹Rs 37.7 billion in less than four weeks from global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA.
Reliance Retail’s network encompasses supermarkets, consumer electronics chain stores, cash and carry wholesale, fast fashion stores and online grocery stores, JioMart. It has a presence in almost 7,000 cities, with 640 million visitors in major categories of groceries, consumer electronics and clothing.
The investments provide Reliance Retail with funds to compete both offline and online. The investments come as the country’s retail sector gears up for the upcoming holiday season and would help Reliance launch an assault on rivals like Flipkart and Walmart-owned Amazon.
The source also noted that Future Group had made an offer to Amazon, along with other potential buyers, and that the deal with the billionaire RIL led by Mukesh Ambani was signed only after the e-commerce giant rejected it.
Furthermore, according to Amazon’s contract with Future Coupons, the US entity has the first right to invest in Future Retail after three years and before ten years.
The Amazon deal was also conditional on the government’s FDI policy that allowed multi-brand foreign retail companies. Since there is no policy, they cannot invest, the source said that Amazon is raising this issue almost a month after the announcement of the deal with Reliance.
In August this year, Future Group had announced the sale of its retail, wholesale, logistics and warehousing businesses to Reliance Retail Ventures Ltd (RRVL), which operates RIL’s retail business, on the basis of a going concern to ₹24,713 crore.
Future Enterprises will subsequently sell through a recessionary sale the retail and wholesale business that includes key formats such as Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly owned subsidiary. of RRVL, “said a Future Group statement on Aug. 29.
It will also sell the logistics and warehousing business to RRVL through a retail sale, he added.
In August 2019, Future Retail informed stock exchanges that Amazon.Com NV Investment Holdings LLC would acquire a 49% stake in Future Coupons from its promoters, led by Kishore Biyani, for an undisclosed amount.
At the time, Future Coupons had a 7.3% stake in Future Retail. As part of the deal, Amazon was also granted a purchase option, which allowed the major US e-commerce company an option to acquire all or part of the promoter’s equity interest between the third and the tenth year.
Amazon also has a stake in other retail chains in the country: Shoppers Stop and More.
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