In a supposedly private letter to employees, but seen and reported by Reuters on March 31, Reliance has defended its abrupt takeover of debt-laden Future Retail’s stores. Reliance Industries (RIL) said it was “compelled to act beyond expectations.”
In the letter, dated March 8, RIL stated it went “well and truly beyond what can be expected” to keep Future “out of harm’s way,” and took “significant steps”—including a bailout package worth more than $630 million—to ensure business continuity at Future and make sure there was “no impediment” to the controversial $3.5 billion deal the two companies announced in October 2020.
This is the first time, albeit privately, RIL has defended taking over around 900 Future Retail stores.
Future Retail’s reaction to RIL’s “forceful” acquisition
Future Retail hasn’t yet reacted to Reliance’s letter.
However, on March 16, in a filing to BSE, the Kishore Biyani-led group expressed its surprise over RIL’s move.
“Reliance Group has unilaterally terminated the leases and forcefully taken over control of hundreds of Future Retail’s stores…Such termination of leases and takeover of stores by Reliance Group has come as a surprise to FRL and its Board since, throughout the entire period, the Future Group and Reliance Group have been collaborating to ensure full continuity of businesses,” Future Group said (pdf).
How will Amazon react?
Amazon is also involved in the saga, having forcefully objected to the RIL/Future deal after investing $200 million in Future, and apparently including a non-compete clause, in 2019. Earlier this month, the US company took out an ad in India’s leading newspapers accusing both Reliance Retail and Future Retail of fraud.
Amazon is also yet to respond to the RIL letter.