Group 5 Business Communication PPt for M&A

Business Communication MBAX-8206

M&A Communication related Failure of Amazon-Future Group -Reliance Deal

Group 5 Team Members N021 Geeta Goswami N022 Hanuman Meena N023 Himanshu Nath N024 Jitender Tanwar N025 Jivanshi Arora

No of Pages - 8

Executive Summary

A legal spat between Amazon.com Inc. and its Indian partner that started with an arbitration verdict in Singapore has got fiercer in New Delhi courtrooms. And neither side is ready to back off.

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The US e-commerce giant and Mumbai-based Future Group, whose retail assets billionaire Mukesh Ambani’s Reliance Industries agreed to buy for $3.4 billion in August, are locked in a dispute over that deal.

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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 Jeff Bezos-led 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.

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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.

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What led to the feud?

What are the arguments by the two sides?

What did the courts in India and Singapore say?

What’s the fight really about?

Who’s hanging by the thread awaiting a verdict?

But no. of large scale investors have big competitors also.Reliance has set a track record to establish a monopoly in every sector to compete rivalry competitors. Reliance competitors are DiMart and Amazon.

Reliance has established in almost all sectors.In the last few months many investors have invested in Reliance company like Google,facebook,SilverLake etc. which shows that many investors have so much trust on them.

Reliance Future Group M&A Deal

To compete with them Reliance acquired Future Group for 26 K Crores in 2020 as Reliance retail segments are not in every city as Big Bazaar has to get access in 1800 cities in India.

info

Amazon bought 49% stake with Future Group promotor Future Coupons Ltd in 2019 with 1500 crore deal which led to become stakeholder of 3.58% in Future Group also.

A twist came in after this deal.

SO AMAZON GOT THE POWER ON FUTURE GROUPS ALSO AND MADE THE LIST OF TERMS AND CONDITIONS IN WHICH IT WAS CLEARLY TOLD NOT TO DEAL WITH COMPETITORS LIKE RELIANCE INDUSTRIES.

After Future’s agreement with Reliance, Amazon said the deal between Reliance Future Group was a violation of a non-compete clause and a right-of-first-refusal pact it had signed with the Future Group.

While Future Retail would be able to place its products on Amazon’s online market place, the two had also agreed that the Future Retails products would also be a part of Amazon’s new plan, which intended to deliver products in select cities within two hours of a customer ordering them.

So Amazon took Future Group To Singapore Arbitration Forum Over Reliance Retail Deal .On October 25,2020 emergency arbitrator VK Rajah issued an emergency arbitration order (EA order) in favour of Amazon. The order restrains Future Group entities from proceeding with the share seal deal or any such agreement with Reliance and other restricted parties mentioned in the non-compete clause signed between Amazon and Future Coupons.

The deal also required Future Group to inform Amazon before entering into any sale agreement with third parties. On its part, the Future Group has said that it had not sold any stake in the company, and was merely selling its assets and had therefore not violated any terms of the contract.

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But then Division bench opposed this decision and nullify based on the reason that their deal is between them so Amazon has no locus to oppose the same since it was not a party to the deal.Also they said that agreement between Amazon and Future Coupons has no relation with the deal signed between Future Retail and Reliance Retail.Therefore the groups of companies doctrine could not be invoked.

Amazon gets interim relief as Singapore Arbitaration court paused Future Group Reliance Deal to sell its retail,wholesale,logistics and warehousing units to Reliance Retail and Fashionstyle.

Under Single Judge bench in February 2021,it was decided that Arbitrator decision was not a nullity and it is enforceable under Indian Laws.

But currently under Indian Law, there is no express mechanism, for enforcement of the orders of the Emergency Arbitrator.So Reliance and Future Group denied to follow this.

So Amazon moved to Delhi High Court in India under Section 9 of the Arbitration & Conciliation Act , 1996 to get similar reliefs as granted by the Emergency Arbitrator.

Now Amazon has moved to Supreme Court to seek stay a stay in proceedings.

Unknown Facts

When Amazon Future Coupons deal happened , this info was not shared with the other shareholders.

Jeff Bezos did it illegally under the corporate watchers

The Future Retails Shareholder Agreement & Future Group Shareholder Agreement has not been disclosed to any Indian Regulator like SEBI etc.

Transactions have been shown in such a way that SEBi will not be able to catch.So they must ask for more details

In the two tier structure ,BEzos has taken control of the FRL which is against FDI Rule.

Communication issues in this deal

The Future Retails Shareholder Agreement & Future Group Shareholder Agreement has not been disclosed to any Indian Regulator like SEBI etc.

When Amazon Future Coupons deal happened , this info was not shared with the other shareholders.

Due to these issues , Employees were effected the most after the deal as they are not able to start working on the deal for business.

References

https://retail.economictimes.indiatimes.com/news/industry/explained-why-amazon-is-feuding-with-its-partner-future-group-and-billionaire-mukesh-ambani/80779021 https://www.livemint.com/news/india/amazon-moves-supreme-court-against-delhi-hc-s-order-on-future-ril-deal-11617876435890.html https://www.youtube.com/watch?v=Sir_zIcbzD4 https://www.youtube.com/watch?v=7R4W8Wn0mxo

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