Brilliance of Reliance in taking over Future Group

We all know about what is going on in the game between Amazon and Reliance to take over Future Group’s retail business in India.

Future Group, which owns India’s number one and largest (arguably or a couple of years back) retail chain in India, we all know as Big Bazaar.

It's been over a year since Amazon and India's?Future Group?have been locked in a complex legal stand-off that has stalled Future Group's $3.4 billion sale of assets to?Reliance Industries.

After battling it out in courtrooms for several months, Amazon and Future agreed on March 3rd 2022, to hold discussions to resolve their dispute, which was rather an unexpected turn of events.

But what exactly has been the dispute? The fierce battle has been to gain supremacy in one of the world’s fastest-growing retail markets, i.e. India.

The Deal

In 2019, Amazon and Future had become business partners when the former invested $200 million in a unit of Future group.

As per Amazon’s argument, that deal came with non-compete clauses that prohibited Future from selling retail assets to certain rivals, including?Reliance.

Moreover, the deal also included clauses for settlement of any disputes under rules laid down by the Singapore International Arbitration Centre, as per a report by?ET.

But in 2020, Future Group, which was hit hard by the pandemic, decided to sell assets to Reliance.

Come in Picture, Amazon

Amazon has argued that various agreements signed in the 2019 deal with Future gave Amazon the special rights over Future's retail assets, some of which it had also hoped to ultimately own if India's rules for foreign investors got eased. So, the potential Future-Reliance deal "destroys" the latter prospect, Amazon had said, as per?ET.

But Future Group denies any wrongdoing, saying?Amazon?is illegally seeking to exert control on Future's retail business. On the other hand, Future group's flagship retail arm Future Retail says it faces liquidation and its more than 27,000 employees can become jobless if the Reliance deal fails to go through.

Brilliant Move by Reliance

In a sudden move on February 25, 2022, Reliance, which had not played a public role in the dispute yet, began executing a ‘de facto’ takeover of some 500 Future stores.

Reliance had assumed many of the leases held by cash-strapped Future and has now moved to take over possession.

Reliance has made Future Group move their assets (equipment) from these stores but didn’t ask employees to move out, and rebranded the stores as their own while keeping all the personnel.?

How this is a brilliant move?

If you can recall the movie “The Founder”,?There was a specific set of dialogues -

Here you see, reliance is used the same way to acquire the retail business of the future group.

Surprisingly no one noticed it before, that many of the stores were leased from reliance and wherever it wasn’t reliance was swift enough the lease transferred to them once future group started to fail rent for multiple months.

Hence in legality, they are not taking over future group’s retail business(if things go south in the courtroom for them), they are simply opening their own stores in the same location with the same employees.?

This is simply brilliant.

I personally do not see any chance of come back from Amazon’s perspective.