India's Future Retail suspends supermarket operations as Reliance plans takeover (updated)

Future Enterprises

28/02/2022 24:30

(Repeats Sunday story, no change to text)
    By Aditya Kalra
    NEW DELHI, Feb 27 (Reuters) - Future Retail Ltd  FRTL.NS ,
India's second-largest retailer, suspended most of its online
and offline operations as stores remained shut on Sunday, after
rival Reliance bid to take over its flagship supermarkets for
missed lease payments.
    Reliance Industries Ltd  RELI.NS  will rebrand the Future
stores after the company failed to make payments for them to
Reliance, sources told Reuters on Saturday, closing most outlets
of the popular Big Bazaar chain.  urn:newsml:reuters.com:*:nL1N2V10C1
    Though Future has more than 1,700 outlets, all the 200
stores that Reliance will rebrand as its own will be Big
Bazaars, which was started around two decades ago by Kishore
Biyani, dubbed as India's retail king for transforming the
sector.
    Future and Reliance did not respond to requests for comment.
Future told stock exchanges on Saturday the company was "scaling
down its operations."
    Future's stores across India remained shut on Sunday as
Reliance did stock-taking ahead of a rebranding, people familiar
with the plans said.
    "We regret to inform you that currently stores are
non-operational for 2 days," Big Bazaar told a Twitter user who
complained about a closure.
    Future's e-commerce mobile app and website were also not
available for online ordering. 
    Reliance's move assumes significance as it follows failed
efforts since 2020 to close a $3.4 billion deal to acquire the
retail assets of Future, whose partner Amazon.com Inc  AMZN.O 
has blocked the transaction by citing violation of contracts.
Future denies any wrongdoing.
    Reliance had transferred leases of some stores of debt-laden
Future to its name and sublet them to Future, but is now taking
over as Future did not make payments. Reliance has offered store
staff jobs on existing terms.
    "All employees, consumers, and everyone in India - we are
all attached to the Big Bazaar brand," a Big Bazaar employee on
Sunday. "So you feel sad this is happening."
    In blocking the Future-Reliance deal, Amazon has long argued
that Future violated the terms of a 2019 deal in which the U.S.
giant invested $200 million in the Indian company. Amazon's
position has been backed so far by a Singapore arbitrator and
Indian courts.
    The move will upset plans of Amazon, which hoped one day to
have a piece of Future's stores itself. But the U.S. firm
appears to have little legal recourse, as store landlords appear
to have independently given the leases to Reliance, said a
lawyer familiar with the dispute.
    "Probably Amazon didn’t think Reliance will be this
aggressive," said the lawyer.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Explainer: Long-running legal dispute between Amazon, India's
Future    https://reut.rs/3IoRS6h
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Aditya Kalra in New Delhi; Editing by William
Mallard)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))