In a separate statement Monday, Future Retail
said it wasn’t party to the Singapore proceedings and the matter “will have to be tested” under Indian arbitration law.
“One can expect legal proceedings to be initiated in Indian courts from both” Future and Amazon, said Amit Jajoo, a partner at law firm IndusLaw. “If Future Group is stopped from going ahead with the sale, effectively it also stops Reliance.”
wants to block Reliance’s purchase of Future’s brick-and-mortar assets because such a deal would give Ambani unparalleled dominance in the only billion-people economy open to foreign firms. Bezos has bet more than $6 billion on India, and Future’s assets will allow it to reach small towns that house key consumers in a market estimated to swell to $1 trillion.
Representatives for Amazon declined to comment beyond its Sunday statement, which welcomed the Singapore order and committed to an expeditious arbitration.
Amazon drew the battle lines earlier this month when it accused Future of violating a contract between the two sides by agreeing to a buyout by Reliance. The deal would have been a bailout for Future, which faces another potential cash crunch as competition in the Indian retail space intensifies and the economy slows amid the coronavirus pandemic.
A spokeswoman for the Seattle-based e-tailer told Bloomberg on Oct. 8 that it had initiated steps to enforce its contractual rights with Future, without giving more details. The deal between Reliance and Future, announced late August, is awaiting regulatory approval, which won’t necessarily be delayed by the Singapore court’s order.
Amazon agreed to purchase 49% of one of the Future Group’s unlisted firms last year, with the right to buy into their flagship, Future Retail, after a period of between three and 10 years. But about two months ago, rival Reliance announced it would buy the retail, wholesale, logistics and warehousing units of the indebted Future Group, almost doubling its footprint.
In May, Amazon was considering increasing its stake in Future’s retail unit to as much as 49%, people familiar with the matter said at the time. But that transaction didn’t materialize in time for Future, seeing it instead cut a deal with Ambani’s refining-to-retail conglomerate.
“Amazon is establishing itself as a reliable online retailer and to take their marketshare will need a huge effort from Reliance, which is not structured for online retail,” said K.S. Raman, a Mumbai-based retail adviser to the Consumer Electronics & Appliances Manufacturing Association. “But any online retailer will need strong offline support, and that’s why Future’s huge store presence is very attractive to them both.”
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