India’s Bombay Stock Exchange (BSE) is planning to consult with the market regulator regarding a purchase deal between Reliance Industries and Future Retail, after Amazon objected to the tie-up, Reuters reported on Friday (Oct. 30), citing sources.
The Singapore International Arbitration Centre (SIAC) issued a stay on Monday (Oct. 26) due to a claim filed by Amazon that alleges the deal breaches prior agreements it had with Future Retail. The eCommerce giant owns a 49 percent stake in Future Coupons, which owns a 7.3 percent stake in Future Retail.
The BSE will consult the market regulator about the $3.4 billion deal and ask both companies to clarify details about the transaction.
Following the arbitration order, both Reliance and Future said they want to move forward with the deal “without any delay,” a source told Reuters. In the meantime, Amazon responded to the order by contacting the Securities and Exchange Board of India (SEBI), the BSE and the National Stock Exchange, to stop the deal, two separate sources said.
Sources with knowledge about the case previously told Reuters that the order is not automatically enforceable in India. Amazon could end up having to go to an Indian court for a binding order.
Amazon’s complaint about the deal centered on its own 2019 agreement with Future Coupons, a division of Future that owns a stake in Future Retail. Parameters of the deal included clauses that prevent Future from selling its retail assets to “restricted persons.” The list includes any firms connected to billionaire Mukesh Ambani, chairman, managing director and majority shareholder in Reliance Industries.
Future Retail said earlier this week that if the deal doesn’t happen, it could be facing liquidation that would put thousands of people out of work.
Reliance said it was still planning to move forward because everything was was done in accordance with Indian law.
The deal would make Ambani a solid majority retail contender in the competitive eCommerce space in India.