In a letter to the Securities and Exchange Board of India (SEBI), Amazon India has complained that its Indian partner Future Retail misled the shareholders by saying it was complying with its contractual obligations with Amazon.
On August 29, Future Retail had announced that it would “sell by way of a slump sale the retail and wholesale business” of its supermarket chain Big Bazaar, premium food supply unit Foodhall, and fashion and clothes supermart Brand Factory’s retail and wholesale units to Reliance Retail.
However, Amazon owns a 49% stake in Future Retail and has invested $200 million in a Future unit. Amazon said, the Future-Reliance deal means that Amazon will no longer remain the single largest shareholder of Future Retail, which has an “irreplaceable and widespread network” of more than 1,500 retail stores.
Amazon alleged that it had a contract with Future retail that prevents some listed companies from buying a stake in the company. The list includes Reliance, which is growing rapidly in the Indian Retail market and had received several investments from the market.
However, Amazon took the matter to Singapur arbitrator where it won an injunction to halt the Future-reliance deal. While Future Retail argued that it had “complied with all agreements and cannot be held back” by the arbitration proceedings. The Future Group said there was no question of any fraud or misleading the public or shareholders, without elaborating.
