Unstoppable force seems to have met an immovable object at a Singapore tribunal last weekend.


You bet. It’s rather rare that Reliance Industries’ deals get derailed. But, then, Amazon is no pushover either. And, when the stakes are high, you can expect a tooth-and-nail fight. This clash of the titans, Jeff Bezos and Mukesh Ambani, among the two richest persons of the world, has big implications.

Such as...

One, Future’s future is at stake. If its ₹24,713-crore deal announced in August to sell the chunk of its business to Reliance Retail does not go through, because of the legal challenge mounted by Amazon, the debt-laden Future Group may be staring at liquidation. Amazon’s alternative fund-raising options for Future may not be workable now — it’s just too much water under the bridge.

Next, Reliance Retail’s growth plans face a potential setback. Reliance Retail — already the country’s largest organised retailer with about 12,000 stores — was expecting a quick scale-up with the acquisition of the Future Group’s 1,800 or so stores. The acquisition would also have helped Reliance Industries’ plans to take on the entrenched Amazon and Flipkart in the e-commerce sweepstakes in India.

Besides, the many marquee investors who have put in thousands of crores for a stake in Reliance Retail the past few months might be uneasy over the recent turn of events. Their investments would have assumed that Future’s major businesses are in Reliance Retail’s kitty. So, it’s a big deal for Reliance.

Now, why is Amazon playing the spoilsport, or is it?

Well, think about the fracas from Amazon’s perspective. It had bought 49 per cent in Future Coupons in August last year for ₹1,430 crore; FDI rules did not allow it to invest in Future Retail. Future Coupons held 7.3 per cent in Future Retail and so Amazon indirectly held about 3.6 per cent in Future Retail.

The agreement also gave Amazon an option of acquiring all or part of the promoter’s shareholding in Future Retail between the third and tenth year. There were also some share-transfer restrictions on the promoter shares in the company and a right of first offer to Amazon. Besides, Amazon had drawn up a ‘negative list’ of entities to whom shares could not be sold; Reliance Industries was part of this list.

Amazon’s investment in Future Coupons would have been predicated on improving its presence in the brick-and-mortal retail space in India. Amazon is said to have been informally helping Future Retail find a suitable investor such as Premji Invest — before Kishore Biyani decided to hitch his wagon to Mukesh Ambani. Net-net, Amazon feels short-changed by the Future-Reliance deal, which it thinks will make its investment futile. So, it petitioned a Singapore arbitral tribunal, asking to stop the deal.

It’s got relief, it seems

Well, Amazon has won the first round. The emergency arbitrator has put an interim stay on the Future-Reliance deal. But the legal battle is far from over. Future Retail says it is not a party to the agreement under which Amazon has invoked arbitration proceedings. It has questioned the Singapore court’s jurisdiction, and said that the order will have to be tested under the Indian Arbitration Act.

Both Future Retail and Reliance Retail have said that they propose to complete the transaction without delay. Amazon, meanwhile, could also be moving to have the stay enforced.

So, a grand legal battle beckons

Yes. Unless the warring parties smoke the peace pipe. The Future rides on hope.

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