Reliance abandons plans to buy Indian retailer due to challenges

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Reliance’s decision to pull out comes after nearly two years of litigation when Amazon contested the acquisition.

Through Bloomberg

Billionaire Mukesh Ambani abandoned a plan to buy a shaky Indian retailer amid protracted legal challenges from Amazon.com Inc., potentially ending one episode of the wider clash between the two titans to conquer the multi-billion dollar market. to control the country.

In a filing on Saturday, Reliance Industries Ltd. that the proposal to buy certain assets of the Mumbai-based Future Group – which ran the country’s largest supermarket chain before the pandemic hit – “cannot be implemented” after its flagship company Future Retail Ltd. had failed. to win the approval of its secured creditors for the deal. Reliance went no further.

Shares of Future Retail fell a whopping 5.1% in Mumbai on Monday, extending this year’s plunge to 45%. Reliance fell by a staggering 1.8%, compared to a 1.4% drop in the benchmark S&P BSE Sensex Index.

Since Reliance announced its plan in August 2020 to buy Future’s core units for rupees 247.1 billion ($3.2 billion), the debt-ridden retailer has been at the center of a battle between Ambani and Jeff Bezos. Amazon has vehemently contested the Ambani takeover, arguing in several courts that it had the first right by contract to refuse to buy Future.

Adding Future’s Big Bazaar stores to its assets would have helped Amazon expand its physical footprint across the country. Similarly, Ambani relied on Future’s retail, wholesale, logistics and warehousing units to support the operations of Reliance Retail Ventures Ltd. expand – part of a broader hub of the group’s main oil refining and petrochemical activities.

tortuous lawsuits

Reliance’s decision to pull out also comes after nearly two years of arduous litigation in several courtrooms in India and Singapore that worsened Future Group’s financial health. With no lifeline in sight to revive its businesses, the retailer has defaulted on debt, forcing some of its lenders to file bankruptcy cases against the company.

The setback for Reliance may be minimal after the group began stripping employees and taking leases from hundreds of stores once run by Future Retail and Future Lifestyle Fashions Ltd.,

“The deal cancellation has little impact on Reliance as they already own most Futures stores,” said Kranthi Bathini, a strategist at WealthMills Securities Pvt, based in Mumbai. “In addition, many Future employees have migrated to Reliance, so they already have what they wanted without taking over Future.”

Last month, Amazon told India’s Supreme Court that ceasefire talks with Future Retail to bury the dispute had failed and published newspaper reports warning the local retailer and its founders that any transfer of assets to Reliance would lead to civil and criminal legal action. to provoke.

Separately, Future Retail said in the April 22 filings that a whopping 69% of secured lenders voted to decline Reliance’s offer, failing the threshold needed to gain approval.



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