Amazon (AMZN) has complained to India’s market regulator that Future Retail Ltd misled shareholders by saying it was complying with its contractual obligations to Amazon, reports Reuters.
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In August Future Group sold its retail assets to Mukesh Ambani’s Reliance Industries Ltd for $3.4 billion.
According to Reuters, Amazon alleges that the deal breaches its $200M 2019 agreement with local partner Future- which stated that Future could not sell its retail assets to “restricted persons” such as Reliance.
Indeed, Amazon has already won an injunction from a Singapore arbitrator to halt the Future/ Reliance deal – but Future subsequently reported that it had complied with the agreement and “cannot be held back” by the arbitration, says Reuters.
In the letter to the Securities & Exchange Board of India (SEBI) Chairman Ajay Tyagi, procured by Reuters, Amazon said Future’s news release and stock exchange disclosures violated Indian regulations, requested further investigation into the matter, and argued that the deal should be called off.
“Such a disclosure is against public interest, misleads public shareholders … as well as perpetuates a fraud for the benefit of the Biyanis alone,” Reuters reports that the letter said (Future’s promoter family is led by Kishore Biyani).
Meanwhile Reliance says it plans to “enforce its rights and complete the (Future) transaction … without any delay.”
Shares of Amazon have been on a steady gaining streak jumping 64% so far this year, with the $3,812 average analyst price target implying almost 26% upside potential is lying ahead in the coming 12 months.
RBC Capital analyst Mark Mahaney recently reiterated his bullish call on Amazon with a $3,800 price target following the e-commerce giant’s impressive third quarter earning results.
“AMZN printed another very strong Rev and Profit growth quarter, and [we] continue to view AMZN as perhaps the single biggest COVID beneficiary. Q4 Rev guide implies continuing strong trends for Amazon” the analyst told investors. He adds that COVID has also accelerated Prime adoption – and continues to estimate AMZN closing in on 200MM Subscribers.
Overall, AMZN scores a Strong Buy analyst consensus with 34 Buy ratings vs just 1 hold rating. (See Amazon stock analysis on TipRanks).
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