Two of the world’s wealthiest men are contesting to get a larger share of India’s retail market, and things are heating up.
A day after Amazon India obtained an emergency order from the Singapore International Arbitration Centre (SIAC) restraining Future Group from going ahead with the deal to sell its retail business to Reliance Retail Ventures, the two Indian companies have said that they are on course to execute the deal.
On Oct. 25, Reliance Retail, owned by India’s richest man Mukesh Ambani, said that it has entered the deal to acquire the assets and business of Future Retail under “proper legal advice and the rights and obligations are fully enforceable under Indian law.”
Meanwhile, in a separate statement on Oct. 26, billionaire Kishore Biyani-led Future Retail, the company behind brands like Big Bazaar, Easyday, and WH Smith, said the Rs24,713 crore ($3.4 billion) deal would “proceed unhindered without any delay.”
Despite the optimism, the shares of both Reliance Industries (RIL), the parent firm of Reliance Retail Ventures, and Future Retail have taken a beating. While RIL’s stock has fallen more than 2% since Oct. 26, Future Retail’s stock has declined by 4%.
The root cause of Amazon’s dissent dates back to August 2019. Here’s what has happened so far:
Though Amazon has got some immediate relief, both Reliance and Future Group have hinted that they are not bound by the SIAC, which is a non-profit body that provides an alternative method of dispute resolution arising from cross-border transactions involving foreign companies. It settles cases privately and confidentially outside the public court system.
Some experts have said that Amazon’s legal move is not strong enough to stall the deal. “SIAC order cannot be enforced in India until ratified by an Indian court,” a person aware of the development told The Economic Times.
Meanwhile, Future Group has argued that Future Retail was not a party to the agreement between Amazon and Future Coupons, therefore the objection does not fare. The Future Group is reportedly planning to move the Delhi High Court to challenge the SIAC order.