Future group moves to SC | Future-Reliance Deal
Futures Retails now moves to Supreme Court to challenge High Court’s verdict. The High Court had upheld that the decision of Arbitration Court was binding on Futures Retails and Reliance.
We know that Reliance is trying to expand its business in every sector. Be it telecommunication or retail. For reliance, the major competition in the retail sector is Amazon and Dmart.
Future Retail Ltd has major established stores like Big Bazaar, Easy Day across the country.
To strengthen its business in the retail sector, Reliance entered into a deal to acquire Future Retails Limited (FRL). But Amazon moved to the Singapore Emergency Arbitration Court against this deal. How can Amazon have the power to do so? The answer lies in the shareholding pattern of Future groups.
Amazon owns 49% in Future Coupons ltd. Future Coupons owns around 7% in future groups.
So indirectly, Amazon owns about 3.5% of Future Retails Ltd. Apart from this, when Amazon acquired Future Coupons in August 2019, some conditions were laid. One of the conditions stated that Future Coupons wouldn’t sell its assets without consulting Amazon.
In 2020, Reliance acquired Future retails for about Rs 26000 Cr. After this deal, Amazon moved to Singapore Arbitration Court. The court ordered the deal to be put on hold.
But then Reliance and Future Retail questioned whether the judgment would be binding in India. They moved ahead with the deal. They got permission from institutions like SEBI, CCI. Amazon then moved to Delhi High Court.
The De HC said that the deal should be put on hold and arbitration court’s judgment is binding.
In response, futures retails said that they might have to file for bankruptcy if they delay the deal further. Hence, the decision was challenged in the Supreme Court.
Despite the legal tussle, there is potential for future groups. Future Group has invested good amount in technology advancement in the entire business that is the reason both Reliance and Amazon do not want to miss the train and want to board it any any cost at station. Reliance can wait for another 1-2 months to get the dust settled and hoping positive to buy stack in future group on other hands Amazon if wants to expand business in India then it needs Future Group.
Many buyers are waiting for right times to invest in it tomorrow there might be increase in buying orders since all negative news are already there including quarterly loss. The last closing price of Future Retail was 49.10 a share which is the lowest of its history.