Amazon fighting fierce legal battle in Supreme Court, High Court, SEBI, Government levels and International Arbitration, against Kishore Biyani, by making Reliance Industries also a party, to stall the deal of Rs.25,000 crore. Supreme Court stayed the deal, with next hearing scheduled after 5 weeks, is seen a near term win for Amazon.
Future Group (FG) on 29-8-20 entered into a deal with Reliance Retail, to transfer its Retail & Wholesale Business and the Logistics & Warehousing Business, as going concerns on a slump sale basis, for lump sum aggregate consideration of Rs. 24,713 crore. Reliance Retail also proposes to invest:(a) Rs. 1,200 crore in the preferential issue of equity shares of FEL (Future Enterprises Ltd, being the resultant merged company, after merger of 5 other companies of FG), to acquire 6.09 % of post-merger equity; and (b) Rs. 400 crore (with an eventual investment of Rs. 1,600 crore) in a preferential issue of equity warrants, which, upon conversion, will result in Reliance Retail acquiring further 7.0% in FEL.
Amazon may just want to delay the deal by about 12 months, which will give good time to Amazon and other Retail Giants, to expand its foothold in india, with more advanced Logistic and Technology tools, to give next generation experience of shopping to their buyers. Even in Amazon-Future deal, there is provision of monetary payment of about Rs. 1,600 crore, by either party seen in default.
Maybe, climax of thie legal fight will eventually be seen in award of damages to Amazon, which is generally seen the legal outcome. This delay of 12 months or so, will cost Rs. 15k to Rs.20k to FG, by way of interest, operational losses, as also, loss of market share. All this in turn may get asked by FG from Reliance, while potential acquisition of Assets of FG by Reliance, may be seen turning outdated and old.
In that case, Reliance may be on crossroads and may be in double mind to consummate the FG deal or not. Legal battle is seen getting more FILMY than Bollywood Masala Film.