In a surprising move, Amazon has sent a notice to Mumbai based Future Group over the deal with Reliance Retail. Amazon has accused the future Group, which is India’s second largest retail chain, for breaching the terms of its contract by selling a significant part of its business to Ambani’s Reliance Retail. As per the notice, Amazon has a problem with the deal in which Future Group announced the selling of its retail and wholesale business, as well as its logistics and warehousing business, to Reliance Retail for $3.4 billion. The deal was closed in late August this year.
Before this deal, Amazon acquired a significant 49% stake in “Future Coupons,” a group entity owned by Future Group. The deal earned Amazon a 3.58% stake in Future Retail, and also the right of first refusal to purchase any more stake in Future Retail both directly as well as via entities, Future Group said in a filing at the time. This also restricts the Future Group from entering into a deal with certain firms.
However, this is a bit of a surprise, as Amazon itself has plans to acquire a 9.9% share in India’s biggest retail chain and also its rival “Reliance Retail.” The recently launched Jio Mart is giving a tough competition to Amazon and Flipkart by leveraging its strong offline presence with Reliance Retail chain, available in 6,500 cities and towns. Amazon confirmed about the legal notice but did not elaborate as the matter is under consideration. Moreover, Future Group has not yet made the notice public on the stock exchange.
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