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Home / Business News / Future Group shares tank up to 10% after Reliance deal put on hold; RIL down 4%

Future Group shares tank up to 10% after Reliance deal put on hold; RIL down 4%

Future Retail Ltd, which operates retail chains as Big Bazar and Easy Day said it is not a party to the agreement under which Amazon has invoked arbitration proceedings and the deal cannot be held back through the arbitration process.

business Updated: Oct 26, 2020, 20:25 IST
Press Trust of India | Posted by Deepali Sharma
Press Trust of India | Posted by Deepali Sharma
New Delhi
Amazon, which had agreed to purchase 49 per cent of one of Future’s unlisted firms last year with the right to buy into flagship Future Retail Ltd after a period of three years to 10 years, had dragged Future to arbitration after it signed a pact to sell retail, wholesale, logistics and warehousing units to RIL.
Amazon, which had agreed to purchase 49 per cent of one of Future’s unlisted firms last year with the right to buy into flagship Future Retail Ltd after a period of three years to 10 years, had dragged Future to arbitration after it signed a pact to sell retail, wholesale, logistics and warehousing units to RIL.(Reuters file photo)

Shares of Future Group companies on Monday tumbled up to 10 per cent after Amazon.com Inc won an interim award to stall the group’s deal to sell its retail assets to Reliance Industries for Rs 24,713 cr.

Future Lifestyle Fashions tanked 9.71 per cent to close at Rs 78.15, Future Retail declined 5.08 per cent to Rs 73.85, Future Enterprises fell 4.99 per cent to Rs 9.53 -- its lower circuit limit and Future Consumer Ltd also dropped by 4.92 per cent to its lowest trading permissible limit for the day of Rs 7.54 on the BSE.

RIL stock tanked 3.97 per cent to close at Rs 2,028.70 on the BSE. During the day, it plunged 4.45 per cent to Rs 2,018.45.

The company’s market valuation eroded by Rs 56,699.69 crore to Rs 13,71,814.57 crore. Meanwhile, Kishore Biyani-led Future Retail on Monday hinted that it may challenge the arbitration award from the Singapore-based arbitration center before Indian legal forums, to ensure that its Rs 24,713 crore deal proceeds unhindered and without any delay.

Future Retail Ltd (FRL) in a statement said the company is examining the interim order passed by the Singapore International Arbitration Center (SIAC) in the arbitration proceedings invoked by Amazon under a shareholders’ agreement with the promoters of Future group.

FRL, which operates retail chains as Big Bazar and Easy Day said it is not a party to the agreement under which Amazon has invoked arbitration proceedings and the deal cannot be held back through the arbitration process.

“FRL has been legally advised that actions taken by the FRL/its board, which are in full compliance of the relevant agreements and eminently in the interest of all stakeholders cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party,” the FRL statement said.

As per the advice received by FRL, all relevant agreements are governed by Indian Law and provisions of Indian Arbitration Act for all intents and purposes and this matter raises several fundamental jurisdictional issues which go to the root of the matter.

“Accordingly, this order will have to be tested under the provisions of Indian Arbitration Act in an appropriate forum,” said FRL adding “in any enforcement proceedings, FRL would take appropriate steps to ensure that the proposed transaction will proceed unhindered without any delay”.

Passing an interim award in favour of Amazon, V K Rajah asked the Future group to put the deal on hold and said that the deal cannot go through until it finally decides the matter, sources with direct knowledge of the development said.

Amazon, which had agreed to purchase 49 per cent of one of Future’s unlisted firms last year with the right to buy into flagship Future Retail Ltd after a period of three years to 10 years, had dragged Future to arbitration after the indebted Kishore Biyani group firm signed pact to sell retail, wholesale, logistics and warehousing units to billionaire Mukesh Ambani’s Reliance.

Meanwhile, RIL retail arm Reliance Retail Ventures Limited (RRVL) has said it intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay.

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