Reliance’s deal with Future Group halted

Bloomberg

Future Retail Ltd’s dollar bonds plunged on an Indian court temporarily restraining parent Future Group from selling its
retail assets to Reliance Industries Ltd, after Future’s partner Amazon.com Inc had sought the suspension.
The Delhi High Court ordered the Future Group and Indian authorities to ensure the status of the indebted Indian retailer’s assets are maintained as is, putting on hold any further steps toward completing the $3.4 billion sale to billionaire Mukesh Ambani’s Reliance conglomerate. Future Retail’s dollar
bond due January 2025 tumbled 7.4 cents to 78.8 cents on Wednesday, the sharpest drop in three months.
Amazon, which is opposing the deal with an eye to dominating a large and vital consumer market, alleges that the plan violates its own contract with Future Group. It had filed an urgent petition last week seeking the suspension. The order can be challenged in a higher court.
The freeze bolsters the Jeff Bezos-led e-commerce giant, which had also urged the court to jail Future Group’s founder and seize its assets for violating an October order from the Singapore arbitration court. The cash-strapped Indian retailer — it risks bankruptcy if the deal with Reliance fails — is caught between two of the world’s richest men as they compete for dominance in India’s estimated $1 trillion consumer retail market. The Indian court said it was of the prima facie view that
the Singapore tribunal order, which asked Future Retail to not proceed with the deal, is enforceable in India.
Future Retail will “explore all legal remedies and take appropriate steps to pursue the scheme of arrangement,” it said in a stock exchange filing. Amazon appreciates the court’s order, it said in an emailed statement.
The stakes are high. For Amazon, which has struggled to gain traction in China where local giants dominate the e-commerce sector, India with a population of 1.3 billion is the only other market of similar size that can boost the company’s growth. Blocking Reliance, which is already the country’s biggest brick-and-mortar retailer, is key. Acquiring Future’s assets will double Reliance’s retail footprint — an advantage Amazon is not willing to cede.