American e-commerce giant Amazon has provided a legal notice to Future Group, backed by Kishore Biyani, about the latter’s 25 billion rupee deal with Reliance Retail.
According to sources close to the development, Amazon has alleged the violation of an agreement made in August 2019 when it acquired 49 percent of the shares of Future Coupons Ltd, which owns 7.3 percent of Future Retail. That deal gave Amazon roughly 3.6 percent in Future Retail.
Call option
As part of the agreement, Amazon was granted a purchase option. This purchase option allowed Amazon to acquire all or part of the promoters’ participation in Future Retail between the third and the tenth year.
Biyani had also agreed to certain share transfer restrictions on the promoter’s shares in the company for the same period, including restrictions not to transfer shares to specific individuals and, more importantly, the right of first offer in favor of Amazon .
But a year later, in August 2020, Reliance Retail Ventures Ltd (RRVL), a subsidiary of Reliance Industries Ltd (RIL), controlled by Mukesh Ambani, acquired Future Group’s retail and wholesale business, and the logistics and warehousing business. for ₹ 24,713 crore.
While Amazon and Future Retail declined to comment, sources close to the Biyani family said the legal notice came as a surprise. “Everything was discussed with Amazon before signing the agreement with Reliance. There were no objections during all this time. It is surprising to receive legal notice more than a month after the Reliance deal was announced, ”said a source close to Future Group.
Amazon’s legal notice could delay the closing of the Future-Reliance deal. This could be detrimental to Future group entities, as they have already defaulted more than five times in the last month. Lenders have refused to release additional funds to the cash-strapped retail company until the Reliance deal gets all regulatory and legal approvals. Future Group sources expect Mukesh Ambani to wage the legal battle with Amazon for speedy resolution.
