Amazon sends legal notice to Future group over latter’s deal with Mukesh Ambani’s Reliance.
Future group recently sold significant portion of the business to Ambani’s Reliance Retail, leading to this legal notice by Amazon. Future group is India’s second largest retail chain and has breached the contract with Amazon by selling business proportion to Ambani’s Reliance Retail.
The decision has been taken after they sold their retail and wholesale business along with its logistics and warehouse business for $3.4 billion to Reliance Retail which is approximately ₹24,713 crores.
Almost a year back, Amazon had bought 49% stake in Future Coupons for INR 1500cr. Future Coupons which had 7.2% stake ownership in Future retail gave Amazon roughly 3.6 per cent ownership of stake in it. As part of the deal, Amazon was granted a call option which allowed it to acquire all or part of the promoters’ shareholding in Future Retail between 3 and 10 years. This deal is the reason amazon has (3.58% or 7.2%) stake in Future Retail, and has non-compete clause. Amazon has cited the non-compete agreement by Future group, as the reason for issuance of legal notice to the firm. So, Legal notice sent by Amazon to Future Group in respect to this deal.
This deal between Amazon and Future Retails restricts the Future Retails from entering into business with some companies. Amazon has confirmed that the legal notice has been sent to Future Group. According to a banker Amazon has lost around $193 million in its Future investment. So, this legal notice sent by Amazon to Future Group is a way to protect them from any class action suit in the United States of America.
Future group started its journey in 1980’s and started with a stonewashed-fabric selling business under the supervision of its founder and group CEO Kishore Biyani. The company since then has served millions of customers and has more than 1,500 stores across 400 cities.
When it comes to reliance Retail, it has been serving 3.5 million+ customers every week and has approx 12,000 stores in 6,500+ towns and cities across the country under the management of India as well as Asia’s richest man, Mukesh Ambani, and has upraised about $5.14 billion by selling about 8.5% shares to some of its investors in past four weeks.