Indian billionaire Mukesh Ambani has been working with his retail company Reliance Industries on a takeover bid of Future Retail—but those efforts are coming to an end. Amazon (AMZN) has been on the other side of the competition, and now has another opportunity to snag more of the Indian retail market for itself.
Will Amazon seize this opportunity and attempt to acquire Future Retail after Ambani drops his $3.4 billion bid?
What happened: Mukesh Ambani drops $3.4 billion bid for Future Retail
Mukesh Ambani, chairman, managing director, and majority shareholder of Reliance, has been in stiff competition with Amazon over Indian market territory since 2021. Ambani’s company put in a $3.4 billion bid for Future Retail, a portion of Indian company Future Group. The acquisition was positioned to revive Future Retail and grow the retail industry across India.
The deal fell through because the company’s secured creditors failed to approve the transaction. According to an Indian stock market filing on April 22, 69 percent of creditors rejected the Reliance offer, coming up short on the required rate of approval. As a result, the deal won’t proceed as Ambani hoped.
Why Amazon could swoop in on Future Retail
Amazon has been fighting Reliance on its proposed takeover for more than a year. The U.S.-based corporation says it has first rights of refusal for Future Retail. Amazon wants to expand its presence in India, especially in the brick-and-mortar space. Since Future Retail focuses on retail groceries, this acquisition would undoubtedly help Amazon’s mission.
Amazon has pursued extensive litigation against Ambani and Reliance. This seemingly unending legal pressure could be a factor in Ambani’s decision to pull the plug on the acquisition. Amazon could use this opportunity to acquire the failing company for itself and restore it to a respectable position in the Indian marketplace.
What happens to Future Retail if Amazon doesn’t bite?
Amazon has the opportunity to buy or reject Future Retail. If Amazon decides against pursuing an acquisition, Future Retail’s likeliest fate is bankruptcy. The company, which once had more than 1,500 storefronts and was considered India’s second-largest retail operation, has declined tremendously. Future Retail’s assumed fate is “an unfortunate event,” according to reporters.
At this point, hundreds of Future Retail storefronts reportedly owe back rent. The prolonged period of downfall could be enough to spook Amazon out of acquiring the brand once and for all.
Amazon has substantially expanded throughout India, especially since the onset of the COVID-19 pandemic and its effects on the retail landscape (especially e-commerce). That’s why Amazon has hired extensively from India and worked to expand its presence throughout the region.
India is largely considered the last unclaimed territory for e-commerce monopolies. Amazon wants to cross it off the list, and it plans to do so with or without Future Retail.