World's largest e-commerce company Amazon is seeking to derail Reliance’s acquisition of Future Retail using an agreement that gave it an indirect foothold in the owner of retail chain Big Bazaar.
Amazon had in August last year bought 49 per cent in one of Kishore Biyani-led Future Group's unlisted firms, with the right to buy into the listed flagship Future Retail (FRL) after a few years and if the government were to undo its bar on foreign ownership of multibrand retailers.
But FRL ran into a severe cash crunch soon after the nationwide lockdown imposed to curb the coronavirus outbreak. It cut a deal with Reliance Industries to sell assets for Rs 24,713 crore, infuriating Amazon.
Amazon now claims that its contract with the unlisted Future Copouns Ltd (FCL) barred a transaction with a number of persons and companies, including Ambani and Reliance.
But that the August 22, 2019 shareholders' agreement gives FCL critical control rights over the management and affairs of FRL, including a bar on selling any retail asset without its approval and a bar on selling assets to any restricted persons.
This, they said, tantamounts to Amazon getting 'control rights' in FRL even though the law does not provide for that.
Amazon on the other hand feels it didn't have any operational control over FRL and the agreement only tries to protect its investments.