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US e-commerce giant Amazon has served a legal notice to Kishore Biyani-backed Future Group over the latter’s ₹25,000-crore deal with Reliance Retail.
According to sources close to the development, Amazon has alleged violation of an agreement done in August 2019 when it had picked up 49 per cent stake in Future Coupons Ltd, which owns 7.3 per cent of Future Retail. That deal gave Amazon roughly 3.6 per cent in Future Retail.
Call option
As part of the agreement, Amazon was granted a call option. This call option allowed Amazon to acquire all or part of the promoters’ shareholding in Future Retail between the third to tenth years.
Biyani had also agreed to certain share transfer restrictions on the promoter shares in the company for the same tenure, including restrictions to not transfer shares to specified persons and, more importantly, a right of the first offer in favour of Amazon.
But a year later, in August 2020, Reliance Retail Ventures Ltd (RRVL), a subsidiary of Mukesh Ambani-controlled Reliance Industries Ltd (RIL), acquired Future Group’s retail and wholesale business, and logistics and warehousing business for ₹24,713 crore.
While Amazon and Future Retail declined to comment, sources close to the Biyani family said that the legal notice has come as a surprise. “Everything was discussed with Amazon before signing the deal with Reliance. There was no objection raised all this while. It is surprising to get a legal notice more than a month after the Reliance deal was announced,” said a source close to the Future Group.
The legal notice by Amazon could delay the closure of the Future-Reliance deal. This could be detrimental for the Future group entities, as they have already defaulted on payments more than five times over the last one month. Lenders have refused to release additional funding to the cash-strapped retail company until the deal with Reliance gets all regulatory and legal approvals. Sources in Future Group are hoping that the legal battle with Amazon will be fought by Mukesh Ambani for a quick resolution.
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