The ruling concerns the proposed $3.8 billion takeover of Future Retail, founded by Indian retail icon Kishore Biyani, by Reliance is a distressed sale of sorts. The COVID-19 pandemic had been unkind to Future, consigning it to the ropes with enormous working capital problems and impending loans that it could not possibly service. Reliance seemed like the perfect white knight to take over the company. But with the new SIAC decision, the arbitrator concluded that the Reliance-Future Retail deal should be put on hold. It reinforces SIAC’s original order last year for the deal to be paused. Beyond the unfavourable outcome, the latest SIAC decision is doubly bitter for Reliance as it vindicated another ruling by the Supreme Court of India that, similar to this most recent verdict, upheld the original SIAC order too. If the decision lasts, it will blunt Reliance’s goal of dominating India’s retail market – at least, for now. Another juicy bonus would have been gaining the rights to Future Retail’s crown jewel, Big Bazaar, India’s largest grocery chain.
Not quite a done deal
When Reliance and Future Retail first announced the deal, the two companies acted like a pair of cozy chums. But with various legal decisions coming to the same conclusion that the deal should be paused, it seems both companies blithely ignored the elephant in the room. There’s also the obvious alliance between Reliance and the Modi government. For anyone that denies the existence of such a relationship, please look at the Narendra Modi cricket stadium in Ahmedabad, Gujarat where one end of the stadium is called Reliance. But considering how almost every country lobbies, protects, and promotes its local businesses to the detriment of more capable ones from other nations, Modi’s stance, if true, can hardly be viewed as unique.
