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Amazon informs SEBI on Future Groups misleading public

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Amazon is geared to pull the Future group on its deal with the Reliance Industries for the worth of $3.4 bn battel. It has claimed Future Retail Ltd is misleading the shareholders by incorrectly saying it was complying with its contractual obligations to the U.S. e-commerce giant, as per the reports of Reuters.

 

Amazon is locked in a bitter legal dispute with Future Group, which in August sold its retail assets to Mukesh Ambani-led Reliance Industries Ltd for $3.4 billion. The deal, Amazon alleges, breaches 2019 agreements by Future.

 

Amazon last Sunday won an injunction to halt Future’s deal with Reliance from a Singapore arbitrator both sides had agreed to use in case of disputes. The Indian retailer then said in a news release it had complied with all agreements and “cannot be held back” by the arbitration proceedings.

 

In the letter to the Securities & Exchange Board of India (SEBI) Chairman Ajay Tyagi on Wednesday, Amazon said Future’s news release and stock exchange disclosures violated Indian regulations, urging the regulator to investigate the matter and not approve the deal.

 

“Such a disclosure is against public interest, misleads public shareholders … as well as perpetuates a fraud for the benefit of the Biyanis alone,” Amazon letter said, referring to Future’s promoter family led by Kishore Biyani.

 

The legal tangle has strained relationship among Amazon with the Future Retail and Ambani’s Reliance group, which is fast expanding its e-commerce business and threatening companies like Amazon.

 

Amazon says the 2019 deal, in which it invested nearly $200 million in a Future unit, had clauses saying the Indian group could not sell its retail assets to anyone on a “restricted persons” list, which included Reliance.

 

Reliance, which in August bought Future’s retail, wholesale and some other businesses, has said it plans to “enforce its rights and complete the (Future) transaction … without any delay.”

 

At the same time, certain Indian lawyers have argued the Singapore arbitrator’s order in favour of Amazon is not automatically enforceable and would need ratification by an Indian court. But Amazon believes the order is binding, it told SEBI. The letter asks the regulator to “suspend review” of the deal.

 

SEBI’s action in the matter “would promote ease of doing business in India by holding listed companies accountable for their dealings,” Amazon’s letter says.

 

Amazon says the Future-Reliance deal means the U.S. giant will lose the prospect of becoming the single largest shareholder of the Indian retailer, which has an “irreplaceable and widespread network” of more than 1,500 retail stores.

 

Future has argued it entered into the deal with Reliance because its retail business was severely hit during the COVID-19 pandemic and it was critical to protect all its stakeholders.

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