Indian Supreme Court rules in favor of Amazon to block $ 3.4 billion Future and Reliance deal – TechCrunch
The Indian Supreme Court on Friday ruled in favor of Amazon blocking the sale of Future Group to Reliance Industries, a major victory for the U.S. e-commerce giant in the key overseas market – and a blow to the industry. richest man in the country, Mukesh Ambani.
The Indian Supreme Court said the order of a Singapore arbitration tribunal last year – which ruled to block the deal between the two Indian giants – was enforceable and legally binding in India.
Today’s court order is the latest setback for cash-strapped Future Retail, which operates the country’s second-largest retail chain.
Reliance Retail, India’s largest retail chain, said a year ago that it has reached an agreement with Future Group to acquire the latter’s retail and wholesale business, as well as its logistics business. and warehousing, for $ 3.4 billion.
Things started to get complicated quickly. Amazon, which had invested two years ago in one of the units of Future Group, accused the Indian firm of violating its contract and approached the Singaporean arbitrator to end the agreement between Indian firms.
Amazon’s deal with Future Retail had given the U.S. e-commerce giant the first right of refusal to purchase more stakes in Future Retail, Amazon argued.
Indian companies, in turn, argued last year that the Singapore court order was invalid in the South Asian market. In addition, the Indian Competition Commission, India’s watchdog body, approved the deal between Indian companies last year.
At the time, Reliance Industries said its agreement with Future Retail was fully enforceable under Indian law and that it intended to complete the agreement “without any delay”.
Shares of Future Retail, which operates 1,700 retail stores in 400 Indian cities, fell 6% on Friday’s order, while Reliance Industries – the conglomerate that runs Reliance Retail – fell 1.3%.
Amazon, Walmart’s Flipkart and Reliance Industries of Ambani, India’s most valuable company, are engaged in an intense battle to dominate the Indian retail market.
With e-commerce accounting for only 3-7% of all retail sales in India – and Reliance Retail launching its own e-commerce business to fight Amazon and Flipkart – Amazon’s future deal with Reliance Retail is already being considered by many industry analysts as crucial to the future of the American e-commerce business in India.
Amazon, which began its journey in India eight years ago, has invested more than $ 6.5 billion in its local operations in the country.
Founded in 2006, Reliance Retail serves more than 3.5 million customers each week (as of the start of this year) through its nearly 12,000 physical stores in more than 6,500 towns and villages nationwide.
The chain of stores, run by India’s richest man, Mukesh Ambani, raised more than $ 7 billion last year. Ambani’s other company, Jio Platforms, also raised more than $ 20 billion from more than a dozen top investors, including Google and Facebook last year.