Future Group, Reliance ignore ruling to hold $3.4bn dealLast updated on Oct 27, 2020, 12:34 am
The Future Group on Monday said that it was examining an order to stall a Rs. 24,713 crore (approximately $3.4 billion) asset sale to Reliance Industries Limited (RIL).
Billionaire Kishore Biyani's Future Retail Limited (FRL) said that its actions "cannot be held back" after a Singapore-based arbitration court restrained it from selling its retail business to RIL.
Here are more details.
What is the issue with the Future Retail-Reliance deal?
Amazon had bought a 49% stake in one of Future's unlisted firms, Future Coupons, last year with a right to buy into Future Retail for a period ranging from three to 10 years.
Future Coupons owns a 7.3% stake in Future Retail.
In August, Future Group announced that it would sell its retail, wholesale, and logistics businesses to RIL's retail arm Reliance Retail Ventures.
Singapore arbitration panel restrained Future Retail from selling assets
On Sunday, a single-judge arbitration panel in Singapore had restrained Future Retail from selling its retail business to RIL for Rs. 24,713 crore.
The former Attorney-General of Singapore, VK Rajah, was the arbitrator for the case.
The ruling asked Future Group to put the deal on hold.
Meanwhile, Amazon had said it remains committed to "an expeditious conclusion of the arbitration process."
Future Retail, Retail intend to close the deal without delay
Future Retail and Reliance have expressed their intentions to close the deal without delay.
Future Retail said, "Actions taken by FRL or its board cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party."
Reliance Retail Ventures said it "intends to enforce its rights and complete the transaction as per its agreement with the Future Group."
Ruling not automatically enforceable in India: Report
Reliance Retail also said the rights and obligations under the deal are fully enforceable under Indian law. Two sources familiar with the matter told Reuters that the temporary injunction is not automatically enforceable in India and would need to be ratified by an Indian court.
Future Group's shares dip 3%; Reliance by 2%
After the arbitration panel's ruling, Future Group's shares went down by over 3% while RIL dipped by over 2%, impacting the broader domestic market.
Already, Amazon and RIL are battling for dominance in India's retail sector, with the latter's launch of JioMart earlier in May.
With JioMart and acquiring Future Group's retail business, RIL aims at rivaling Amazon India and Walmart's Flipkart.