SUMMARY
Amazon has sent a legal notice to the Kishore Biyani-promoted Future Group, over the latter’s alleged breach of a non-compete contract
In August last year, Amazon acquired a 49% stake in the Kishore Biyani-owned Future Coupons for around INR 1,500 Cr
Reliance Retail on August 30 acquired the retail, wholesale, logistics, and warehousing businesses of the Future Group for INR 24K Cr
Global ecommerce giant Amazon has sent a legal notice to the Kishore Biyani-promoted Future Group, over the latter’s alleged breach of a non-compete contract with the sale of its retail, wholesale, logistics and warehousing businesses to Reliance Retail in August this year.
In August last year, Amazon acquired a 49% stake in the Kishore Biyani-owned Future Coupons for around INR 1,500 Cr. Future Coupons is the promoter-entity of India’s second-largest retail chain Future Retail and owns a 7.3% stake in the company. Amazon also managed to acquire around a 3.58% stake in Future Group.
According to the contract signed between Amazon and Future, the sale of the business to rivals (Reliance) is barred. Amazon, in its legal notice, has claimed that Future Group violated the deal between the two companies when it entered into an agreement with Reliance earlier this year.
Reliance Retail on August 30 acquired the retail, wholesale, logistics, and warehousing businesses of the Future Group for INR 24K Cr. Biyani’s Future Enterprises Ltd (FEL) retained the manufacturing and distribution of FMCG goods, integrated fashion sourcing and manufacturing businesses, its insurance joint venture with Generali, and a joint venture with NTC Mills.
Future Retail has more than 1500 stores across 437 Indian cities and towns covering an area of 16 Mn square feet and is the parent of brands like Big Bazaar, Fashion Big Bazaar, HomeTown, Food Bazaar, and others. Big Bazaar reportedly contributes about 80% to Future Retail’s revenue. Comparatively, Reliance Retail operates in nearly 12K stores across 6,600 towns and cities, covering an area of 28.7 Mn square feet.
Last month, Inc42 reported that India’s antitrust watchdog, the Competition Commission of India (CCI) will review the offline and online aspects of the deal between Reliance and Future Group and their effect on the competition in the sector.
The recent dispute between Amazon and Future Group, first reported by ET, could be solved through an arbitration process, or the court’s intervention.
In the last couple of months, Reliance Retail has been attracting investments from several companies, some of which have previously invested in Reliance’s digital venture Jio Platforms as well. On October 6, Inc42 reported that the United Arab Emirates (UAE)-based sovereign wealth fund Abu Dhabi Investment Authority (ADIA) has committed to invest INR 5,512.50 Cr in Reliance Industries’ retail unit Reliance Retail in exchange for 1.20% equity stake on a fully diluted basis.
When the investment comes through, Reliance Retail will have raised INR 37,710 Cr from global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA in less than four weeks.
With the launch of its online store JioMart, Reliance Retail entered into direct competition with Amazon in the ecommerce sector. Both platforms are trying to beef up their online offerings, in terms of product categories and discounts, ahead of the Diwali festive season.
