India-based Future Retail is facing liquidation if it can’t enter into Reliance‘s deal to purchase assets, according to Reuters, citing a legal order in which Future said so to a Singapore-based arbitrator.
If that happens, the livelihoods of thousands of workers will be lost, according to Future’s argument in a legal document, quoted by Reuters.
Amazon, which had a prior deal with Future, is trying to put a stop to the Reliance deal, Reuters reported. On Sunday (Oct. 25), Amazon won a victory in arbitration court to halt Future’s intentions to sell to Reliance, alleging that Future had breached a 2019 contract in which a separate deal would’ve sold assets to Seattle’s eCommerce giant.
Reliance had a newer deal with Future to buy its retail, wholesale, logistics and other divisions for around $3.4 billion, including debt, Reuters reported. The 2019 deal with Amazon reportedly specified that Future couldn’t sell its retail assets to any firms on a list of restricted persons, including any firms owned by Reliance owner Mukesh Ambani, India’s richest man and a chief rival of Amazon’s.
However, Reliance said the arbitration court’s ruling in favor of Amazon wouldn’t impact its deal going forward, Reuters reported. Future Group’s liquidation worries are intensified by the pandemic, which has hit India harder than most of the world.
Amazon counts India as a ripe market it wants to break into, with its massive eCommerce customer bank. Reliance is a top rival for Amazon, with an expanding eCommerce base threatening Amazon along with others like Walmart‘s Flipkart service, according to Reuters.
The original deal Future had with Amazon was a 2019 bailout deal, where Amazon bought 49 percent of one of Future’s unlisted firms on the condition that the eCommerce giant could later buy into Future Retail within three to 10 years. Upon the news that Future was working on a deal with Reliance, Amazon filed suit and won.
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