SUMMARY
India’s antitrust body has apparently sought more information from Amazon about the acquisition
The move is further expected to delay the deal
In August this year, ecommerce giant Amazon announced the acquisition of 49% stake in Future Coupons
Amazon’s plan to acquire a stake in India’s Future Retail has again faced an obstacle, according to media reports. The Competition Commission of India has apparently sought more information from Amazon about its acquisition, which is expected to delay the deal.
“In certain overlapping segments and areas of operation of the parties, the combined market share exceeds the threshold specified in the combination regulations,” said the notice sent by the country’s antitrust body, according to Reuters report.
The report also added that the competition watchdog has also asked Amazon more than 40 questions related to the deal and its businesses.
In August this year, ecommerce giant Amazon had announced that it would be acquiring a 49% stake in Kishore Biyani’s Future Coupons, the promoter entity of India’s second-largest retail chain Future Retail. Future Coupons owned 7.3% shares in the publicly-listed Future Retail, and with this transaction, Amazon would acquire around 3.58% stake in Future Group.
While the financial details of the deal were not disclosed, it was speculated that based on Future Retail’s current market value of $2.9 Bn, 3.58% stake would cost Amazon around $104 Mn.
An official press statement from the ecommerce giant in August said that the tie-up between the two would enhance “Amazon’s existing portfolio of investments in the payments landscape in India.” Future Group owns more than 1500 stores, including Big Bazaar, EasyDay, and Nilgiris across 437 Indian cities, with a total retail space of more than 13.6 Mn sq ft.
Obstacles Derailing The Deal
Amazon and Future group first spoke about the acquisition in January 2018 when Future Group founder and CEO Kishore Biyani met Amazon founder Jeff Bezos at the latter’s Seattle headquarters. Amazon then started the official talks with Future Retail to acquire a 9.5% stake in May 2018. Later, media reports in November 2018 showed that Amazon was discussing a wider agreement with the Indian retail conglomerate.
However, with the government bringing in changes in foreign direct investment (FDI), the discussions took a backseat. Amazon had reportedly decided to not go ahead with the deal. Later, in August this year, with the announcement of the deal, it was also agreed that Amazon would be granted a “call” option. Such an option would allow Amazon to acquire all or part of the promoter’s shareholdings in the company. The option could be exercised by Amazon between 3 to 10 years.
