Twists & turns in the buyout of Kishore Biyani’s Future Retail

The twists and turns in the buyout of Kishore Biyani’s Future Retail has all the makings of a Bollywood lost and found potboiler. After being in the works for well over a year, the deal is back to square one, with Amazon India in a position of advantage. In a recent verdict, the Supreme Court restrained Reliance Retail from going ahead with the acquisition of Future Retail and ruled in favour of Amazon.

That is merely one side to this messy story. On the face of it, the transactions should have gone through without any complications. Amazon acquired a 49 per cent stake in Future Coupons in August 2019 and that gave them an indirect 3.58 per cent holding in the listed entity Future Retail, under which was Big Bazaar, Easyday, FBB, Hypercity, Nilgiris, Heritage, among others.

Those familiar with the discussions speak of how Biyani was banking on the government giving the green signal to FDI in multi-brand retail at some point. “He was playing for time and an exit would have been extremely lucrative for him,” says one person, who recalls Biyani meeting the top brass at Amazon in the US on several occasions. At the time of the fund infusion, Biyani was already stretched and the Rs 1,500 crore was water in a desert.

The pandemic wrecked his plans and soon the group’s position only worsened. The arrangement with Amazon is said to have come with a key condition – Biyani could not sell out to a long list of companies, with Reliance being one of them. Why he still chose to get into a dialogue with Reliance Retail for a sellout is shrouded in mystery. While the news media was having a field day writing on the deal that was cooking, there was no murmur from Amazon. Biyani, in an interview to the media early this year, made it clear that Amazon “was fully aware” of the negotiation with Reliance.

Also read: RIL-Future deal: SC judgement addresses 2 limited points, not merits of disputes, says FRL

A full year after the investment in Future Coupons, the sellout to Reliance Retail was announced. “It is hard to believe Amazon did not know of the deal. They were perhaps willing to go along since it would have eventually given them a stake in Reliance Retail,” says another person. The hitch was that Reliance was acquiring Future group for a much lower amount (the pandemic set Biyani back badly with limited scope to negotiate) and that is said to have upset the folks at Amazon. Questions sent over email to Amazon India, Future Group and Reliance Retail elicited no response and the spokespersons declined to comment when called.

Also read: Singapore's emergency arbitrator held Future Retail investment 'legal': Amazon in SC

Following the court’s verdict, Biyani and Amazon will need to negotiate a fresh deal with Future Retail in no better a position than what it was a year ago. It is clearly a case of time having been lost, minority shareholders being let down and no one standing to have gained. How it plays out from this point will be fascinating. Biyani, a Hindi film lover himself, must be hoping for the perfect ending.

Also read: Future Group must pay $14 mn to bondholders this month or face legal action