Amazon sends legal notice to India's Future Group over deal with Ambani's Reliance Retail
Amazon has sent Future Group, India's second largest retail chain, a legal notice of breach of contract terms by selling a significant portion of its business to Ambanis Reliance Retail.
Future Group announced in late August that it was selling its retail, wholesale, and logistics and warehouse operations to Reliance Retail for $ 3.4 billion.
But before Reliance Retail came into play, Future Group and Amazon also had a deal.
Last year, Amazon acquired a 49% stake in Future Coupons, a group company owned by Future Group's retail business. The deal gave Amazon a 3.58% stake in Future Retail and the right to initially refuse to purchase a further stake in Future Retail both directly and through companies, Future Group announced in a filing at the time.
According to TV broadcaster ET Now, which first covered the legal notice, the deal between Amazon and Future Retail also prevented the Indian firm from closing a deal with certain firms.
India's Reliance Retail is acquiring Future Group's units for $ 3.4 billion
The Future Group, which began its journey as a seller of stonewashed fabrics in the 1980s, served millions of customers in more than 1,500 stores in more than 400 cities earlier this year.
The legal notice has puzzled many in India as Amazon is reportedly preparing to acquire a billion dollar stake in Reliance Retail, India's largest retail chain, according to previous reports from ET Now and Bloomberg.
With e-commerce only accounting for between 3 and 7% of all retail sales in India, and with Reliance Retail building its own e-commerce business to fight Amazon and Flipkart, Amazon's deal with Reliance Retail is viewed by many industry analysts as being critical to the future of the American e-commerce company in India. Amazon, which began its journey to India seven years ago, has invested more than $ 6.5 billion in its local business in the country.
Amazon confirmed that it had filed a legal notice but did not elaborate on it because it was "sub judice". Reliance Retail and Future Group did not comment. The Future Group had not published the announcement on the stock exchange by midnight Wednesday (local time).
Amazon is investing $ 1 billion in digitizing small businesses in India
Reliance Retail was founded in 2006 and serves more than 3.5 million customers per week (as of the beginning of this year) through its nearly 12,000 physical stores in more than 6,500 cities across the country.
The retail chain, run by India's richest man, Mukesh Ambani, has raised around $ 5.14 billion in the past four weeks by taking an 8.5% stake in Silver Lake, Singapore's GIC, General Atlantic and sold to others.
Ambani's other company, Jio Platforms, raised over $ 20 billion this year from more than a dozen marquee investors, including Google and Facebook.
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