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Exchanges give go ahead to Future-Reliance Retail deal

After market regulator Securities and Exchange Board of India (Sebi), stock exchanges have given their approval to Future Retail’s Rs 24,713 crore deal to sell its retail assets to Reliance Retail, part of Reliance Industries Limited, with certain riders.

The BSE and the NSE, in their separate reports, have stated that the comments on the draft scheme of arrangement are “subject to the outcome of any of the ongoing litigations/ arbitration/ legal proceedings involving the draft scheme and/ or the decision by any competent authority/ competent court in this regard”.

Sebi has also given a go-ahead to Future Group’s scheme of arrangement and sale of assets to RIL. US-based Amazon had written to the Sebi asking the regulator to stop the deal, saying that the Future group had violated certain agreement with the US firm. Approvals from the Sebi and bourses are mandatory for the deal to be completed.

The stock exchanges, in their reports dated January 20, have advised Future Group to ensure that the details of the complaints made by NV Investment Holdings LLC (Amazon), the submissions of Future Retail Ltd and the counter submissions of Amazon are brought to the notice of the shareholders of the listed entities involved in the scheme while seeking their approval.

Companies involved in the scheme are advised that any future disputes, complaints, regulatory actions or proceedings, or orders issued therein involving the draft scheme, if any, shall be brought to the notice of shareholders prior to the approval by the National Company Law Tribunal (NCLT).

The stock exchanges have also asked Future to ensure shareholders are informed that 74.2 per cent of the business value of the Future Enterprises Ltd, post amalgamation of all the transferor companies, is getting transferred to Reliance Retail Ventures Ltd and Reliance Retail and Fashion Lifestyle Ltd and that these two companies would not be seeking listing post the scheme of arrangement.

In October, the Singapore International Arbitration Centre passed an interim award in favour of Amazon with a single-judge bench of V K Rajah barring Future Retail Ltd from taking any step to dispose of or encumber its assets or issue any securities to secure any funding from a restricted party.

Sebi has cleared the Future-RIL deal with some riders. Sebi has asked Future Group to specifically mention the litigation pending before the Delhi High Court and arbitration proceedings by Amazon contesting the deal to the shareholders and the NCLT.

The market regulator has also directed Future Group to ensure that suitable disclosure about the latest financials of the companies involved in the scheme being not more than six months old are made before filing the same with the NCLT.

In August 2019, Amazon had agreed to purchase 49 per cent of one of Future’s unlisted firms — Future Coupons Ltd — with the right to buy into the flagship Future Retail after a period of 3 to 10 years. Future Coupons holds 7.3 per cent equity in the BSE-listed Future Retail, which operates popular supermarket and hypermarket chains like Big Bazaar, through convertible warrants.

Amazon had dragged Future Group to arbitration at SIAC, arguing that Future violated its contract by entering into the deal with rival Reliance.

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