Reliance Offers Amazon $20B Stake In Retail Division

Reliance Industries Ltd., the global conglomerate headquartered in Mumbai that owns everything from energy to textiles, retail, and telecommunications, has offered to sell a $20 billion stake in its retail division to Amazon.com Inc.

Bloomberg News, citing one unnamed source with knowledge of the potential transaction, reported Reliance owner billionaire Mukesh Ambani is willing to sell an up to 40 percent stake in the retail business to the world’s largest retailer.

The news service reports Amazon has held talks about investing in its unit and wants to negotiate a potential transaction, the source said. The source said no decision has been made on the exact size of any potential investment, and it’s possible the talks could break down.

If a deal is signed, it would create a retail giant in India, but would also turn Amazon CEO Jeff Bezos and Asia’s richest man from rivals into partners in one of the world’s biggest markets. Bloomberg reported that at $20 billion, it would be the biggest transaction ever in India, as well as for Amazon.

The partnership could signal Amazon’s acknowledgement that it needs a local partner in a country where most retail consists of mom and pop stores. In addition, Reliance would provide Amazon with a brick-and-mortar component in a country where online purchasing is still in its infancy, grabbing just a fraction of the $1 trillion retail market.

“The deal would be a highly complementary one that builds on the strengths of either side,” Utkarsh Sinha, managing director at Bexley Advisors in Mumbai, told Reuters. “Amazon comes with the might of its warehousing capabilities and the ability to streamline supply chains and sweat assets for maximum returns.”

Amazon declined to comment.

A Reliance spokesman told Bloomberg it does not comment on rumors.

“Our company evaluates various opportunities on an ongoing basis,” the spokesman said in an email. “We have made and will continue to make necessary disclosures in compliance with our obligations.”

Reliance reported 1.63 trillion rupees ($22 billion) in revenue in the first quarter. The unit operates almost 12,000 stores in nearly 7,000 communities.

Last month, Reliance purchased Future Group’s 2,000 retail stores and the Big Bazaar grocery chain. Reliance, which is referred to as the “Amazon of India,” owns and operates more than 10,000 stores across categories including supermarkets, consumer electronics, apparel and other various segments, and also owns several eCommerce sites.