The Competition Commission of India (CCI) on Friday (19 November 2020) approved the acquisition of retail, wholesale, logistics & warehousing businesses of Future Group by Reliance Retail Ventures and Reliance Retail and Fashion Lifestyle.
Reliance Industries (RIL) on 29 August 2020 announced the acquisition of retail & wholesale business and logistics & warehousing business from the Future Group as going concerns on a slump sale basis for Rs 24,713 crore through its subsidiary Reliance Retail Ventures (RRVL).
RIL said the acquisition complements and makes a strong strategic fit into Reliance's retail business. As a part of the deal, the retail and wholesale undertaking is being transferred to Reliance Retail and Fashion Lifestyle (RRFLL), a wholly-owned subsidiary of RRVL; the logistics and warehousing uUndertaking is being transferred to RRVL; and RRFLL also proposes to invest Rs 1,200 crore in the preferential issue of equity shares of Future Enterprises (FEL) to acquire 6.09% of post-merger equity; and Rs 400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in RRFLL acquiring further 7.05% of FEL.
The CCI approval is a setback for US retail giant Amazon, which last month won an injunction against the deal from an arbitrator in Singapore.
The Singapore International Arbitration Centre (SIAC) passed an interim order asking Future Group to hold its sell-out plans to Reliance Group and wait for the final judgment on the plea filed by Amazon. The US-based retail giant had filed an arbitration petition with SIAC claiming that Future Group breached the contract under which the US online giant took an indirect stake in their retail business in 2019.
Future Retail (FRL) clarified to the bourses on 26 October 2020 that it was examining the communication and the order received from SIAC.
Early in October, Amazon had sent a legal notice to Future Group citing its non-compete agreement with the Kishore Biyani-led chain. According to the notice, the Future-RIL transaction cannot go ahead without Amazon's approval in view of the non-compete clause entered earlier with the retail group.
Amazon has about 5% stake in FRL after it bought 49% in Future Coupons for Rs 1,500 crore last year in August.
RIL is India's largest private sector company. RIL's activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.
RIL's consolidated net profit fell 6.6% to Rs 10,602 crore on 25.5% decline in net sales to Rs 1,11,236 crore in Q2 September 2020 over Q2 September 2019.
Shares of RIL fell 3.72% to Rs 1899.20 on Friday. In last three months the stock has declined 9.4% under performing the BSE Sensex which rose nearly 15% in the same period.
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