Amazon has solicited for the approval of the Competition Commission of India (CCI) for a deal of Rs 1500 crore. The US-based company, Amazon will accelerate the FDI wave. It attains a secure position of 49% holding in Future Coupons Ltd (FCL), a Future Retail promoter group company. The company needs to assure that the transaction sticks to the norms of Foreign Direct Investment (FDI). Amazon to ride FDI wave. Controls 49% in Future Coupons Ltd.
Amazon had reported in its CCI filing that it would gain control by getting access to voting and non-voting equity shares of FCL. It had availed a resembling structure while attaining 49% in other supermarket stores i.e. 17% of the equity with voting rights and 32% otherwise. This is to ascertain that the proffered deal adheres to the recalibrated FDI norms. There are no assertions as to whether the Amazon and Future group alliance will have the same composition. Additionally, FCL does not hold any Differential Voting Right (DVR) shares.
The spokespersons of both companies have rebuffed to disclose anything about it. The FDI regulations state that the marketplaces should retain a meagre acquisition of less than 26% shares with the right to vote in the selling company.
Premium payment for shares of FCL
Restrictions have been imposed on the number of goods that an associate of the marketplace could render to a standalone seller. It has been noted that the purpose behind the deal between Amazon and Future group is to strengthen their alliance. It is to safeguard the interest of the US Company, Amazon by securing its position as one of the top traders of the Future group.
Amazon had reported in its CCI application that the propounded deal comprises of other integral measures concerning FCL, Future Corporate Resources Private Limited (FCRPL) and Future Retail Ltd (FRL). It is noted that each of these measures concerned with the proposed deal including the attainment of FCL shares by independent investors is referred to as exempt transactions. Therefore, the company need not file a registration with any regulatory body.
Amazon’s move to accelerate
The Biyani family, a Future Group promoter, is the owner of FCL. It is in possession of 39.6 million warrants in Future Retail. This will convert into 7.5% stake in Future Group which is when exercised. However, Future Group Promoter owns a considerable total holding of 47.02% in Future Retail. The group runs 295 Big Bazaar stores and about 1600 grocery outlets.
Amazon has the right to exercise the call option between the third and tenth year. This option, when exercised can make Amazon the largest shareholder in Future Retail. However, further details and notifications to vouch for the above statement are yet to be declared in the CCI application.
Amazon is making every possible effort to secure its chances of becoming a preeminent shareholder in Future Retail. Further disclosures have been made in detail that Amazon is paying around Rs 660 per share, which constitutes about 65%premium to the present share price.
FCL, dealing with and in the development of numerous products and commodities, is one of the largest leading organizations. By forming a partnership with FCL, Amazon gets this massive opportunity to collaborate with Future Retail on several payment stages and solutions. Further, this will open doors for the company to expand the work towards pick up, delivery and fulfilment of customer orders through Future Group’s enormous chain of stores in around 440 cities and towns across the nation.