Add Amazon.com Inc. to the list of companies that have been outmaneuvered by Mukesh Ambani’s juggernaut. Not only has he jolted the U.S. giant in the fight to dominate India’s retail sector, he now holds all the cards in a $3.4 billion dogfight to buy a local cash-strapped retailer.
Ambani’s Reliance Industries Ltd. in late-February quietly began poaching employees and taking over rental leases of hundreds of stores once run by Future Retail Ltd. and Future Lifestyle Fashions Ltd., even as Amazon furiously tried to block formal acquisitions through lawsuits and arbitration across India and Singapore. Ambani’s bloodless coup forced Amazon to seek settlement on the bitter dispute and alarmed Future’s investors and lenders wary of asset-stripping.
“We did not expect Reliance Group to take such drastic actions, without even discussing the matter with us,” Future Retail’s Chief Financial Officer Chandra Prakash Toshniwal wrote in a March 2 letter to Reliance’s retail units. “Please confirm that there will not be any reduction in consideration payable.”
Another letter, dated March 5 -- Bloomberg has copies of both the letters -- sent by Future Lifestyle expressed “concerns and shock” and requested Reliance not to undertake such actions that “may be viewed seriously by the Lenders, who have charge on all current and fixed assets” of the company. Banks may cut off Future’s credit lines, crippling what’s left of an already cash-starved retailer, the letter said.
Read more at: https://economictimes.indiatimes.com/industry/services/retail/how-ambani-outfoxed-amazon-in-a-3-4-billion-deal-dispute/articleshow/90100820.cms