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Business

Reliance’s $3.4 billion deal with Future Group is temporarily halted, while Amazon wins a court battle

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It’s a victory for Amazon, which has been fighting the offer in order to gain control of a huge and important consumer market.

The Delhi High Court has temporarily halted Future Group’s sale of its retail properties to Reliance Industries Ltd, giving Amazon an interim victory in its fight to control a huge and critical consumer market.
The court today directed Future Group and officials to retain the current status of the indebted Indian retailer’s properties, putting any further measures toward the $3.4 billion sale to Mukesh Ambani’s Reliance conglomerate on hold. Amazon claims the agreement is in violation of its own contract with Future Group, and it filed an emergency motion last week to have it suspended. An appeal to a higher court is possible.

The freeze helps the Jeff Bezos-led e-commerce behemoth, which had also asked the court to imprison Future Group’s founder and seize the company’s assets for breaching a Singapore arbitration court order in October. The cash-strapped Indian retailer is stuck between two of the world’s richest men as they fight for supremacy in India’s estimated $1 trillion consumer retail market. If the deal with Reliance falls through, the company faces bankruptcy.

The court stated that the Singapore tribunal order instructing Future Retail not to proceed with the deal is prima facie enforceable in India.

A spokesperson for Future Group declined to comment, though Reliance Industries and Amazon India could not be reached for comment right away.

Amazon has the upper hand.

The stakes are extremely high. For Bezos, who has struggled to gain traction in China, where local giants dominate the e-commerce industry, India, with a population of 1.3 billion people, is the only other comparable-sized market that can help his company expand. It’s critical to stop Reliance, which is now the country’s largest brick-and-mortar retailer. Reliance’s market footprint would be doubled if it buys Future’s assets, an advantage Amazon is unwilling to give up.

Darius Khambata, the retailer’s lawyer, told the court earlier in the day that Future Group was unwilling to talk to Amazon about a possible out-of-court settlement. Future, according to Darius Khambata, does not want to add to the confusion because it has already received regulatory approval for the asset sale. Amazon’s lawyer said that the company was able to speak without relinquishing its legal rights in the case.

Future Group is in an unenviable situation as a result of the Singapore arbitration ruling, with no imminent resolution in sight, according to Utkarsh Sinha, managing director of consultancy Bexley Advisors. A likely alternative now in bankruptcy court “where residual equity could be unlocked,” which would be important in Future Group’s case. “The important question is to whom the importance accrues,” he explained.

Willful Disobedience is a form of disobedience that occurs when someone
Future had engaged in deliberate and reckless disobedience of the overseas arbitration court’s order, according to Amazon’s latest petition. The e-tailer holds a minority interest in one of Future Group’s companies and claims the latter broke a contract when it agreed to the Reliance agreement.

The legal win comes after Amazon’s letters to regulators trying to halt the deal’s approvals were unsuccessful. In November, the antitrust regulator gave its approval. Earlier this month, the stock exchanges announced no negative findings.

Future Retail Ltd, the group’s flagship company, missed an interest payment deadline on its dollar bond on January 22 and suggested meeting the obligation in a month. Its ability to repay is jeopardized by the court order.


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