Amazon tells Sebi to withdraw conditional nod to Future-RIL deal

Amazon has written to India’s market regulator seeking the withdrawal of its
conditional approval to the proposed buyout of retail assets of the Future Group by , as the American online retail giant intensifies its efforts to stall the highly contested deal.

In a letter to Sebi (Securities and Exchange Board of India) on August 17, the Jeff Bezos-led company
cited a recent order by the Supreme Court of India upholding the ruling by an international arbitration court in Singapore that had stayed the Future-RIL deal in October 2020.

ET has reviewed a copy of Amazon’s letter addressed to Sebi Chairman Ajay Tyagi.

“In light of the directions contained in the enforcement judgment, and the EA (emergency arbitration) Order whose validity has been affirmed by the honourable Supreme Court, Amazon requests you to take all such action as is necessary to comply with the Supreme Court Judgment, and to further ensure that no communications subsist or emanate which are at variance with the Supreme Court Judgment,” the US-based etailer said in its note to Sebi.

“Accordingly, we request your good offices to direct the Indian Stock Exchanges to withdraw the Observation Letters with immediate effect,” the letter stated.

apex court’s order on August 6 had dealt a major blow to the Kishore Biyani-led Future Group, which has maintained that the ruling by a Singapore court was not valid in India. Last year, the Singapore International Arbitration Centre (SIAC) through an emergency arbitration (EA) order had stayed the Future-RIL deal in response to a petition from Amazon, which has mounted a concerted fight to stall RIL’s rising dominance in India’s burgeoning organised retail market.

Amazon India and Future Group declined to comment on the matter.

Fight For Dominance

The legal joust deepened further last week, when the
Future Group filed a separate case against Amazon in the Supreme Court, seeking the clearance of its deal with RIL.

Sebi, which had
given a conditional nod to the proposed Rs 24,713 crore buyout of Future’s retail assets by India’s biggest conglomerate in January, had stated that a final go-ahead would be subject to the outcome of court proceedings in Indian courts.

It had also told the Future Group to disclose its ongoing disputes from the stock exchanges while seeking approval on the deal.

Separately, the country’s competition watchdog had
cleared the buyout proposal in November 2020.

In response, Amazon had written to antitrust regulator Competition Commission of India (CCI) as well as Sebi asking that no clearance should be given to the proposed deal as the matter is disputed and pointing out that the arbitration court in Singapore had stayed the deal.

CCI’s clearance for the deal had been granted in November 2020 while Sebi’s conditional nod came later in January 2021.

Retail Foray

In August 2020, Reliance Retail Ventures Limited (RRVL), a subsidiary of RIL,
announced that it had agreed to buy Future Group’s retail businesses across apparel, lifestyle, and grocery segments to bolster its presence in the Indian retail market. The deal also included the purchase of Future Group’s wholesale and supply chain business.

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As part of the buyout, RRVL said it would take over the Future Group’s existing debt, liabilities, and retail stores across formats like Big Bazaar and Easyday. The ambitious proposal was aimed at enabling RIL’s new commerce venture JioMart to leverage the Future Group’s retail assets and also deliver grocery and other essentials to online consumers.

Increasingly, online commerce platforms have been looking to access offline retail points to smoothen supply chain related issues.

Disputed Deal

However, Amazon objected to the proposed deal citing prior commitments made by the Future Group to the American major, with the origin of the dispute going back to
Amazon’s investment of Rs 1,431 crore in Future Coupons, which held about 10% stake in the flagship Future Retail, in August 2019.

As a part of that deal, Future Group promoter Biyani had also entered into a restriction on transfer of shares to specified persons and right of first offer of shares (ROFO) to Amazon as well, according to regulatory filings made by Future Retail at that time.

This list of “specified persons” included Reliance Industries, according to sources aware of the matter. The deal also provided Amazon with the right to acquire the entire or part of the shares of promoters of Future Retail after three years of the deal and before 10 years, in “certain circumstances” and subject to the law.

Following the announcement of the Future-RIL deal in August 2020,
Amazon sent a legal notice to the Future Group in October and since then both parties have been fighting over the deal in Indian courts as well as at SIAC.

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