Amazon, the US-based e-commerce giant, and India’s Future Group have locked horns over a deal since the latter agreed to sell its retail assets to billionaire Mukesh Ambani’s Reliance Industries for $3.4 billion in August.
Amazon says Future violated a partnership contract with the asset sale to its rival and wants to scuttle it, while the indebted Indian group says it would collapse if the transaction fails.
The e-tailer accuses Future and its founder Kishore Biyani of flouting an interim order in October from a Singapore arbitration court that halted the asset sale. Amazon also recently asked an Indian court to jail Biyani and has petitioned local regulators not to approve the Future-Reliance deal while the arbitration is underway.
Amazon gained an early legal advantage in Singapore but Future scored in an Indian court this week that allowed the deal to proceed. With Amazon likely to take the fight next to India’s apex court, the legal wrangle continues to threaten India’s biggest retail acquisition and probably spoil the party for many more such acquisitions on the anvil.
The fight is essentially for the dominance of India’s estimated $1 trillion consumer retail market. Future Group is caught in the middle of this tussle between companies helmed by two of the world’s richest men.
Here is the timeline of how the events unfolded:-
For giant corporate M&As are never easy in the first place and then too typically 70%–90% of acquisitions are abysmal failures as seen in the past.
Adam Grant, in his book, Give and Take has shared that Companies that focus on what they are going to get from an acquisition are less likely to succeed than those that focus on what they have to give it. Creating value by being a better investor works well in countries with less-developed capital markets and is part of the great success of Indian conglomerates such as Tata Group and Mahindra Group. They acquire (or start-up) smaller companies and fund their growth in a way that the Indian capital markets don’t. Is Future Retail the startup or the smaller company that both RIL and Amazon want? But the real test would be what they will do with India's most coveted Retail asset that would build the next retail chapter for India.