Amazon Have Sent A Legal Notice To Future Group For Breaching The Contract
The American e-commerce company Amazon has sent a legal notice to India’s second-largest retail chain Future Group over breaching the agreement between Amazon and Future Group. Last month, Reliance Retail announced that it has reached an agreement with Future Group to acquire its retail and wholesale business for USD 3.4 Billion.
“With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which has played an important role in the evolution of modern retail in India,” said Ambani’s daughter Isha, who serves as a director at Reliance Retail, in a statement.
Likewise, Amazon announced that it’s acquiring a 49% stake in Future Coupons, a subsidiary of Future Group, in 2019. This deal had granted the company a 3.58% stake in Future Group Limited. The agreement between Amazon and Future Group conveyed that the later company is restricted to transfer the shares to a specific person or entity. Its rival Reliance Industries was one of them in the list, Times of India published, citing sources familiar to the matter said.
The e-commerce giant has sent a copy of the notice to market regulator SEBI and stock exchanges regarding the breach. According to the sources, Amazon got to know about the deal between Reliance and Future Group when it went public. “Yes, we have initiated proceedings to enforce our contractual rights. It will be inappropriate for us to provide any details relating to the matter as it is subjudice,” an Amazon’s spokesperson said.
“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 Biyani Group. One of the sources said that Future Group is hoping Mukesh Ambani, the chairman of Reliance Industries, to fight a legal battle with Amazon for a quick resolution.
Reliance Industries have been swamped by investments from foreign investors such as Google and Facebook. In July 2020, ET Now reported that Amazon is in talks with Reliance to acquire a stake of 9.9% in Reliance Digital. Ambani-led Reliance has secured more than USD 20 Billion in investment in this year 2020 which includes Silver Capital, KKR, and General Atlantic, among others. Reliance’s new venture JioMart has become a challenge to Amazon as the company is looking forward to capturing the offline and online business too. Moreover, it’s also facing intense competition with Walmart who bought Flipkart Online Services Ltd. for USD 16 Billion in 2018.
According to consultancy firm BCG and Retailer’s Association India, India’s retail market is expected to surpass USD 1.3 Trillion by 2025. Reliance Retail who ventured into the market in 2006, currently has more than 11,000 stores in 6,500 cities and towns across India. It serves more than 3.5 Million customers each week. Meanwhile, Future Group who entered the market in the 1980s has served over millions of customers and had more than 1,500 stores in 400 cities last year.