The National Company Law Tribunal (NCLT) has restrained Future Group from holding shareholders’ meetings to seek approval for its proposed $3.4 Bn deal with Reliance Retail.
The meeting was initially scheduled for November 11. Due to the restraint, the retail giant has approached the tribunal seeking approval to reschedule this meeting for November last week.
The legal setback for Future Group comes a month after the company law tribunal allowed the Kishore Biyani-led Future Retail to hold a meeting of its shareholders and creditors seeking their approval of the sale of its retail assets.
The restraint also comes after Amazon objected to the proposed meeting on Monday (November 8). It cited a Supreme Court’s September ruling that had directed statutory bodies such as the NCLT, Competition Commission of India (CCI) and Securities and Exchange Board of India (SEBI) not to pass any final order pertaining to the Amazon-FRL dispute for four weeks.
The tribunal had also allowed Reliance Retail to hold a meeting of its shareholders and creditors seeking their approval for the $3.4 Bn deal, despite objections raised by Amazon.
In September 2019, US-based ecommerce giant Amazon informed the CCI that it had proposed to acquire 49% stakes in Future Coupons. The deal had reportedly also mentioned a list of 30 entities with whom the Future Coupons could not transact, including Reliance Retail, a subsidiary of Reliance Industries Limited. This was supposed to be another exclusive deal with Future Group, similar to a deal done by Amazon with Shoppers Stop in 2017 by acquiring a 5% stake at INR 180 Cr.
While the restraint was on Future Coupons, Future Coupons owns 7.3% shares in Future Retail. Through this transaction, Amazon had also managed to acquire around a 3.58% stake in Future Retail — the business that is set to be acquired by Reliance Retail.
However, regardless of the Amazon-Future Group contract, Future Group in August 2020 announced a deal with Reliance Retail. According to the deal terms, Reliance Retail will acquire the entire retail, wholesale, logistics and warehousing businesses of the Future Group at INR 24,713 Cr.
Consequently, the Reliance – Future deal has been bitterly contested by Amazon. A decision by the Supreme Court is pending over a petition filed by the US-based ecommerce major.
Yesterday (November 8), the independent directors of Future Retail also wrote to the CCI requesting it to revoke the approval it had given to Amazon’s part acquisition of Future Coupons in November 2019.