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Amazon
has sent a legal notice to Future Retail, India’s second largest retail chain, for breaching the terms of its contract by selling a significant portion of the business to Ambani’s Reliance Retail.
Future Group
announced in late August that it was selling its retail and wholesale business, as well as its logistics and warehousing business to Reliance Retail for $3.4 billion
.
But before
Reliance Retail
came into the picture, Future Group and Amazon also had a deal
.
Last year, Amazon acquired a 49% stake in Future Coupons, a group entity owned by Future Group’s retail business. The deal gave Amazon a 3.58% stake in Future Retail, and the right of first refusal to purchase more stake in Future Retail both directly as well as via entities, Future Group said in a filing at the time.
According to TV network ET Now, which
first reported about the legal notice
, the deal between Amazon and Future Retail also restricted the Indian firm from entering into a deal with certain firms.
Future Group, which kickstarted its journey as a stonewashed-fabric seller in the 1980s, served millions of customers through more than 1,500 stores in more than 400 cities as of earlier this year.
The legal notice has puzzled many in India, as Amazon is reportedly
preparing to acquire a multi-billion-dollar stake in Reliance Retail
, India’s largest retail chain, according to earlier reports by ET Now and Bloomberg.
With e-commerce commanding only between 3 to 7% of all retail sales in India — and Reliance Retail
launching its own e-commerce business
to fight Amazon and Flipkart — Amazon’s deal with Reliance Retail is seen as crucial for the American e-commerce firm’s future in India by many industry analysts. Amazon, which kickstarted its journey in India seven years ago, has invested over $6.5 billion in its local business in the country
.
Amazon confirmed that it had filed a legal notice. Reliance Retail and Future Group did not comment. As of Wednesday midnight (local time), Future Group had not disclosed the notice on the stock exchange.
Founded in 2006, Reliance Retail serves more than 3.5 million customers each week (as of early this year) through its nearly 12,000 physical stores in more than 6,500 cities and towns in the country.
The retail chain, run by India’s richest man Mukesh Ambani, has
raised about $5.14 billion by selling about an 8.5% stake
in its business to Silver Lake, Singapore’s GIC, General Atlantic and others in the past four weeks.
Ambani’s other venture, Jio Platforms, this year
raised over $20 billion
from more than a dozen marquee investors including Google and Facebook.
