Mukesh Ambani has one bigger giant in his name that has been outmaneuvered by him and this time it is Amazon Inc. The fight for $3.4 billion deal to take over India’s largest retailer that can bring shining promises to whosoever wins the deal. In recent developments, Reliance played all its cards to make sure that it wins over legal battle.
In late February Mukesh Ambani started taking over rental leases of hundreds of stores that were once held by Future Retail Limited and Future Lifestyle Fashions Limited which is commonly known to us as Big Bazaar. Amazon took several steps to block the formal acquisition by filing lawsuits and arbitrations across India and Singapore. In the end Amazon decided to look for a settlement and alarmed all the investors of Future Group of asset stripping.
Chandra Prakash Toshniwal Chief Financial Officer of Future Retail said to Reliance on March 2, 2022 that, “We did not expect Reliance Group to take such drastic actions, without even discussing the matter with us. Please confirm that there will not be any reduction in consideration payable.”
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Another letter dated March 5, 2022 as disclosed by Bloomberg expressed the concerns and shock of Future Retail and the company requested Reliance not to take any actions that “may be viewed seriously by the Lenders, who have charge on all current and fixed assets of the company.” The letter said that such actions might alarm Banks and they might cut off credit lines which will cripple a business that is already starved of cash.
Future Group got caught in battle between Amazon and Reliance when Reliance in 2020 wanted to buy all strores and warehouses of Big Bazaar for 3.4 billion dollars. Amazon said that this deal would violate the agreements that Amazon Inc made with another firm Future Retail in 2019 which has debt obligations and can run into bankruptcy anytime.
Last week Amazon decided to go for a settlement route two end legal battle that has been going on for 2 years. Future Group is treading very carefully as it does not wants to upset Reliance at any cost. In a letter Future Retail said, “We have always acted with full transparency and have considered Reliance Group as a partner. We would, therefore, request that you do not take any actions against us.”
