SEBI nod for Reliance-Future deal – Is it a setback for Amazon?

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(Image credit: Amazon)

The Securities and Exchange Board of India (SEBI), the stock market regulator in India, has granted approval to the Future Group and Reliance Retail deal, much against the pleas of Amazon India that is fighting its best to thwart the deal.

In any case, Amazon’s challenge of the deal is still pending in the Delhi High Court. And it is on this ground that Amazon wanted the SEBI to not issue the no objection certificate to the Reliance-Future Group pact.

SEBI, while giving its approval, has listed a number of conditions in accordance to the Composite Scheme of Arrangement, also making a reference to the misgivings of Amazon.

SEBI has also asked Reliance and Future Group to keep their shareholders informed about the legal dispute.

What is the deal and why is Amazon protesting?

Last August, the Kishore Biyani-led Future Group worked out a Rs 24,713 crore agreement with Mukesh Ambani-helmed Reliance Retail. Future Group, which is in financial distress, sold its retail, wholesale, logistics and warehouse businesses to Reliance Retail Ventures (RRVL).

Amazon had, however, bought 49% stake in one of Future’s unlisted firms in 2019 in a complex deal. Amazon’s contention is that as part of this deal Future could not have sold itself to Reliance, Amazon’s rival in the market place.

Future is saying that Amazon had failed to provide any help to the debt-laden firm that suffered a massive setback during the Coronavirus lockdown. Amazon contends that there were ongoing discussions on multiple options with partners and with the promoters of Future.

Last year, India’s antitrust watchdog cleared the deal between Ambani and Biyani firms.

Amazon had written 8 letters in the last three months to SEBI asking the regulator to suspend its review of the Future-Reliance deal and not give it the go-ahead as the matter was before the Delhi High Court.

Last year, Amazon has also taken the matter to an arbitrator in Singapore and asked the court to block the deal between Reliance and Future.

The arbitration court in Singapore temporarily stopped Biyani’s Group from going ahead with the sale.

Later, the Delhi High Court also rejected Future’s plea for an injunction to restrain Amazon from writing to regulators and other authorities over the deal. But the court also gave a go-ahead to the regulators to decide over the deal.

The SEBI approval now is being seen by analysts as a setback to Amazon. 

An Amazon spokesperson has been quoted in the media as saying that the company will keep the legal fight going. 

Amazon said SEBI’s comments should be seen in the light of its reference that it is all “subject to the outcome of the ongoing arbitration and any other legal proceedings.”

January 21, 2021
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