Shares in Future Group companies jumped 5% on Thursday after Indian stock exchanges approved the group’s $3.4 billion deal to sell its retail assets to Mukesh Ambani-led conglomerate Reliance Industries.
The approval takes Future, which operates supermarkets like Big Bazaar and high-end food stores such as Foodhall in India, a step closer towards sealing a deal that will create India’s groceries market leader.
The deal had soured ties with Future’s business partner Amazon.com Inc, which alleged the transaction breached agreements with Future made in 2019. Amazon raised legal and regulatory challenges to the deal.
Future Retail shares, which soared in August after the deal was announced, ended 2020 around 77% lower on Amazon’s challenge.
“The deal was more like a bail-out package for Future which was deep in debt, so the clearance of this hurdle takes it a step closer to relief on the financial side, while Reliance’s retail position stands to improve,” said Ajit Mishra, vice president, research at Religare Broking.
The Indian exchanges said they reached the decision after communicating with India’s markets regulator, the Securities and Exchange Board of India.
Future Group founder and Chief Executive Kishore Biyani said earlier this month the conglomerate expects swift regulatory approval of the deal, after a New Delhi court last month left the fate of the transaction with regulators.
“Thousands of jobs, payments to suppliers and customer fulfillment happens when a company like Future Group is assured of business continuity,” said Kumar Rajagopalan, CEO, Retailers Association of India.
Future Retail shares rose 4.9% to a one-month high on Thursday, while Reliance shares jumped 2.7% to its highest in nearly three months, boosting the benchmark indexes.
Reliance and Future did not immediately respond to Reuters request for comment. Amazon said on Wednesday it would continue to pursue legal remedies to enforce its rights.