InvestorQ : Why is Amazon filing a legal case against Future group over its Reliance Retail merger deal?
Niti Shenoi made post

Why is Amazon filing a legal case against Future group over its Reliance Retail merger deal?

Answer
user profile image
ishika Banerjee answered.
3 weeks ago


At the outset, let me clarify that Amazon has not filed any legal case in India against the Future group. Instead it has approached the Singapore International Arbitration Centre or SIAC alleging that the Future Group had breached the contract by selling stake to Reliance.

SIAC, based out of Singapore, is an alternative method of dispute resolution in cross-border transactions and grievances can be brought to the attention of the SIAC where there is any dispute in a cross border transaction.

It may be recollected that last year Amazon had bought 49% stake in Future Coupon. This had automatically given Amazon 5% ownership of Reliance Retail. Also, the contract had stipulated that Future Group would have to give Amazon right of first refusal or ROFR.

Amazon has alleged that the stake sale by Future Enterprises to Reliance Industries was virtually a breach of the agreement as the sale in Reliance Retail stake had been done without giving the ROFR to the Amazon group. The finer details are awaited.

In the case of the Future group stake sale, Biyani had to rush the deal through due to mounting debt of over Rs.12,500 crore. The deal with Amazon for stake sale could not be conducted till completion of 3 years, which was ruled out due to debt constraints.