Amazon to acquire 49% stake in Future Coupons

Our Bureau Mumbai | Updated on August 23, 2019 Published on August 23, 2019

Amazon gears up for full-fledged retail battle with stake in Future Retail.   -  Bloomberg

The acquisition indicates that US company is gearing up for full-fledged retail battle

Indian retail segment is set for a clash between US-major Amazon and Mukesh Ambani's Reliance Retail with the former acquiring 49 per cent stake in Kishore Biyani's Future Coupons Ltd. The deal allows Amazon to acquire all or part of Biyani's shareholding in Future Retail Limited three years from now.

“Amazon has agreed to make an equity investment in Future Coupons Limited for acquiring a 49 per cent stake comprising both, voting and non-voting shares,” Future Retail said in a statement to the stock exchanges.

As part of the agreement, Amazon has been granted a call option. This call option allows Amazon to acquire all or part of the Promoters' shareholding in Future Retail Limited (Company), and is exercisable between the third to tenth years, in certain circumstances, subject to applicable law.

“The Promoters have also agreed to certain share transfer restrictions on their shares in the Company for the same tenure, including restrictions to not transfer shares to specified persons, a right of the first offer in favour of Amazon, all of which are subject to mutually agreed exceptions (such as liquidity allowances and affiliate transfers),” Future Retail said.

This comes even as Mukesh Ambani-backed Reliance Retail is all set to roll out its New Commerce platform with the aim to become one of the top 20 retailers globally. “Our beta trials with thousands of merchants across multiple locations in the country established the premise of New Commerce with a significant increase in sales and improvement in margins for the participating merchants. We are now getting ready to roll out the platform at a larger scale,” Mukesh Ambani, Chairman of RIL, had said at the recent AGM.

Read more: Reliance Retail set to launch its ‘New Commerce’ platform

Amazon is increasing its investments into India. While it has already cornered a significant market share in the online retail space, the acquisition of Future Retail stake is an indication that the American company is gearing up for full-fledged retail battle.

Shares of Future Retail fell as much as 8.1 per cent in early trading on Friday. At 11.50 am, the stocks were trading 5.67 per cent lower at ₹390.

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Published on August 23, 2019
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