BENGALURU (INDIA) – Indian firm Future Retail Ltd’s shares showed a dip of 9% on Thursday after e-commerce giant Amazon.com Inc issued a legal notice to Future Group, alleging that the retailer’s $3.38 billion asset sale to Reliance Industries flouted an agreement with the US-based firm.
Amazon, Reliance and Walmart Inc’s Flipkart are competing to gain market share in the country’s fastest-growing online market for food and groceries. The move by Amazon is aimed at slowing down the deal between Reliance and Future.
Last year, the e-commerce behemoth had purchased a 49% stake in Future Coupons Ltd, which owns a 7.3% stake in Future Retail. Reliance headed by Mukesh Ambani decided to purchase some businesses, including retail, of Future Group.
But Amazon made the investment along with some contractual rights which include a right of first refusal and a non-compete-like pact.
“Amazon will try to explore all options to stop or delay the Reliance-Future deal but Reliance has all the muscle power and it won’t be an easy battle for Amazon to win at the court,” said Satish Meena, senior forecast analyst at Forrester Research.
The group, which has oil and telecoms operations, runs close to 12,000 retail outlets and it is expanding its new e-commerce venture. It links its neighbourhood stores to Reliance for online deliveries of groceries, apparel and electronics.
