Singapore court halts Future-RIL retail deal
The US retailer has been trying to build its presence in the offline retail space to complement its strong online presence.Updated: Oct 26, 2020, 04:36 IST
Amazon.com Inc. on Sunday secured interim relief in a Singapore arbitration court, stalling partner Future Group’s plan to sell its retail and wholesale assets to a unit of rival Reliance Industries Ltd for Rs 24,713 crore.
The e-commerce giant claimed that Future Group had violated an investment contract when it agreed to sell its retail assets to Reliance Retail Ventures Ltd (RRVL).
A single-judge bench of VK Rajah SC barred Future Retail from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.
The parties will have to wait for further orders from the tribunal when constituted, Rajah said in his order.
“The majority respondents (Future Group) have asserted that the ‘horse has bolted’ and that, consequently, the claimant no longer has any legitimate interests meriting protection. This is incorrect. The horse has not bolted, even though the respondents have opened the stable door. Even assuming that the ‘horse has bolted’, it is apparent that the respondents are contractually obliged to work with the claimant to cajole the ‘unruly horse’ to return to its stable”, the court order said, a copy of which was reviewed by Mint.
The ruling, however, gives Amazon a breather as a Future-Reliance combine may pose serious competition to the online retailer. The US retailer has been trying to build its presence in the offline retail space to complement its strong online presence.
“We welcome the award of the emergency arbitrator. We remain committed to an expeditious conclusion of the arbitration process,” an Amazon spokesperson said. Future could not be reached for comment.
“RRVL has entered into the transaction for acquisition of assets and business of Future Retail Ltd under proper legal advice and the rights and obligations are fully enforceable under Indian law,” Reliance Retail said in a statement late Sunday.
“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” it added.
In a deal announced on August 29, RRVL said it would acquire retail, wholesale, logistics and warehousing businesses of the Future Group. The deal included close to 1,800 stores across Future Group’s Big Bazaar, FBB, Easyday, Central, Foodhall formats that are spread over 420 cities in India. Amazon holds a 49% stake in Future Coupons Pvt. Ltd, which gives it a minority stake in Future Retail. Curbs on foreign direct investment prevent Amazon from taking more than a 51% stake in a multi-brand retailer. FDI in multi-brand retail is a sensitive issue in India, attracting wide concerns over its impact on small traders and businesses.
Mint reported on October 23 that Amazon is open to helpingFuture Group bring in a new, financially strong partner or investors if it calls off its deal with RRVL.