InvestorQ : Do you see the acquisition dispute between Future Group and Amazon worsening by the day?
Sam Eswaran made post

Do you see the acquisition dispute between Future Group and Amazon worsening by the day?

Moii Chavate answered.
2 years ago

The battle is far from over and looks set to continue and that is the problem for Future Group. The latest round between Amazon and Reliance is fought in the courts between Amazon and the Future Group. Amazon just wants to hold up the RRIL / Future Group deal, as it would give a massive offline fulfilment edge to the Reliance group. As of now RIL is not getting involved but it looks like a war set to go on.

Amazon wants the deal shelved for not being given the right of first refusal. Amazon must have a solid case, otherwise the tribunal would not have ruled favourably. The Future group will not get much help from Reliance as this pertains to a Future Coupons deal that Reliance is not privy to. The more it drags, and it is likely to drag, the tougher it gets for Future group to even survive with its mighty debt problem.

Amazon appears to be more intent on dragging the case for as long as possible as its primary interest is stalling the deal at all costs. Amazon knows better than anyone else that the merger deal would give Reliance a huge brick and mortar support system which is undoubtedly an invaluable asset when it comes to fulfilment. That is something Amazon and other e-tailers are struggling with.

FDI rules in India do not permit Amazon or Wal-Mart to buy majority stake in a retail venture. The closest they can get to avert this competitive risk is to delay the deal to the extent possible. Amazon also realizes that the longer this deal is delayed, the less likely it is to work and that would be good enough for Amazon’s short term plans.