Reliance-Amazon-Future Retail saga shows how legal technicalities can stall business transactions in India. Future Group saddled with huge debt of Rs. 15000 crore and cash inflows stalled due to pandemic/ lockdown, had agreed to sell its retail, wholesale, logistics and warehousing business to Reliance Retail at a value of Rs. 27,513 crores. This would Reliance a significant edge in retail business and it was not pleasing to Amazon. The deal has now gone into legal labyrinth and we are not sure how is this going to unfold. 

Amazon had last year acquired 49% equity stake in Future Coupons Ltd.- a promoter entity of Future Retail Ltd. and as per shareholders agreement, Amazon was granted call option allowing it to acquire all or part of promoter's shareholding in Future Retail between 3rd and 10th year. Further Amazon's approval was required in case of any transfer of Future Retail's assets, amendment of AOA or issuance of share capital in contravention of Shareholders Agreement. Further, when an investor has a call option exercisable at a future date, the shareholders agreement has detailed clauses saying that in the meanwhile, those shares can't be sold to anyone else, and may also state that if you sell to anyone else, it will be subject to my rights to call the shares from them at a price specified in the agreement. 


 

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