Amid market mayhem, Future Group stocks up 20%, locked in upper circuit

Future Group Stocs

On a day when stock markets were bleeding on Omicron strain fears and other global cues, all Future Group stocks were trading higher by 20 percent and locked in the upper circuit on December 20.

While Future Retail, the largest group stock in terms of market capitalisation, was locked at Rs 57.50, the second-largest stock in the group Future Consumer was locked at Rs 8.19 on the BSE. They are both still away from their 52-week highs of Rs 89.5 and Rs 11.92.

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Future Lifestyle, Future Enterprises and Future Supply also jumped 20 percent to Rs 60, Rs 11.61 and Rs 80.75, respectively, on the BSE.

The rise in the shares came after the Competition Commission of India (CCI) on December 17 suspended its approval for Amazon’s 2019 deal with Future Coupons and imposed a Rs 202-crore penalty on the American e-commerce giant.

The CCI's decision comes amid a bitter legal battle between Amazon and Future Group over the Indian firm’s proposed Rs 24,713 crore deal with billionaire Mukesh Ambani-led Reliance Retail Ventures Ltd.

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In 2019, Amazon had entered into a deal worth Rs 2,000 crore with Future Group to acquire 49 percent stake in Future Coupons.

Future Coupons is the promoter firm of Future Retail by way of owning 7.3 percent stake in the company through convertible warrants.

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In August 2020, RRVL said that it would acquire the retail and wholesale business, and the logistics and warehousing business of Future Group, which was objected by Amazon on the basis of a “non-compete clause” and “right-of-first-refusal” pact with Future.

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The latest CCI order could derail Amazon's attempts to block the sale of Future's retail assets to Reliance Retail, thus bringing relief to the debt-laden Future Group.

Future Group stocks have lost up to 90 percent of their market cap each over the past two years, with all trading at one-tenth of their all-time highs.

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In the 57-page order, India’s anti-trust regulator said Amazon suppressed “the actual purpose and particulars” of the 2019 deal and sought to “establish false representation and suppression of material facts”. CCI said it was now “necessary to examine” the deal afresh and said its approval "shall remain in abeyance" until then.

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Amazon said on December 17 it was reviewing the order "and will decide on its next steps in due course."

Meanwhile, benchmark indices Nifty50 and Sensex fell more than 2 percent to intraday lows of 16410.20 points and 55132.68 points, respectively.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.