Future-Reliance deal on-track to progress

Date : 08 January 2021

Francis Ramos

Senior Retail Analyst

The Delhi high court recently upheld the proposed merger of Future Retail Limited (FRL) with Reliance Retail Ventures Limited (RNRL), following a challenge by Amazon.  It has also allowed Amazon to continue opposing the merger in appropriate legal forums.

Delhi high court clears Future-Reliance deal

According to the Delhi high court, the transaction between Future and Reliance did not violate any legal provisions, and both parties are free to seek approval of the deal from regulators.  This means that the spotlight now shifts to Amazon challenging the deal with the Securities and Exchange Board of India (SEBI) and the Singapore International Arbitration Centre (SIAC). 

Amazon will continue to oppose deal due to stake in Future Retail

Based on the terms of agreement between Future and Reliance, the deal between the two companies would only go through if Future Group’s companies are merged into a single entity.  However,  Amazon has asked the SIAC to block the deal, since it has a stake in one of Future Group’s subsidiaries, Future Retail Ltd (FRL), which runs the flagship Big Bazaar grocery banner.  The SIAC passed an interim order in October 2020 in favour of Amazon, which restrained the Future Group from going ahead with the deal. Since the Delhi high court allowed Amazon to reach out to market regulators on the deal, Amazon has also now written to the Securities and Exchange Board of India (SEBI) to halt the merger of the subsidiaries of the Future Group.

Next phase of arbitration proceedings at the SIAC to begin soon in Singapore

A three-member tribunal has also been set-up at the Singapore International  Arbitration Centre (SIAC). Singaporean barrister Michael Hwang has joined Albert van den Berg and Jan Paulsson, who were proposed by Amazon and Future, respectively. The SIAC formed its panel on 5th December to pass the final judgment on this dispute.

If successful, the merged businesses will create both India’s leading retail business and grocery retail operator.