SK Group, the third-largest conglomerate from South Korea, has announced that the company has agreed to acquire a 16.3 percent stake in VinCommerce for $410 million, reports Reuters. For those who are unaware, VinCommerce is one of the biggest retailers in Vietnam and is a part of Masan Group.

The transaction values the retailer at $2.5 billion. Along with SK Inc (formerly known as SK Holdings Co Ltd), battery maker SK Innovation, SK Telecom, SK Hynix, and SK E&S are also participating in this deal through an investment unit focused in Southeast Asia.

VinCommerce is operating about 2,300 convenience stores and supermarkets in Vietnam and holds about 50 percent of the market share in the country’s consumer retailer sector. With the new investment, the company plans to accelerate online and offline distribution, logistics, and online payments.

Woncheol Park, representative director of SK South East Asia Investment, the SK Group arm that made the investment, said in a statement: “Our investment in VinCommerce is part of SK’s broader strategy of investing in Vietnam’s fast-growing sectors.”

VinCommerce achieved an EBITDA breakeven in the fourth quarter of 2020 and delivered positive EBITDA in the first quarter of 2021. The management is now expected to achieve positive EBIT in the second half of this year.

The SK Group had earlier invested about $1 billion in Vingroup and $470 million in the diversified company Masan Group.

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Earlier this week, Amazon achieved a win in an Indian court, which has also blocked Future’s retail deal worth 3.4 billion US Dollars. This decision essentially halts the sale of assets to Reliance Industries.

As per a Reuters report, the court’s decision is a major setback towards Future and could impact the retail landscape in India. For those unaware, the Future Group is India’s second largest retailer, with over 1,700 stores under its belt. The group had entered into a deal with Reliance for the sale of its retail businesses last year. But now, the court blocking the deal could be disastrous to the company, which stated that it faces liquidation if the deal fails.

The reason why Amazon is fighting the legal battle with Future is due to a previous deal it had with the retail giant back in 2019. According to the major e-commerce based firm, both Amazon and Future entered into a deal back in 2019, with one of the clauses prohibiting the Indian retailer from selling their assets to anyone on a “restricted persons” list that included Reliance. This led to a legal face off between the two corporations, which are led by two of the world’s richest men, Jeff Bezos and Mukesh Ambani.

The result of this will also determine Amazon’s ability to eat away at Reliance’s dominance in the region. At the moment, the latter holds a 12,000 strong retail store network. Furthermore, Future had argued that it was not bound by an arbitrator’s order to put the deal on hold, despite Amazon pushing for the court to enforce the ruling to block the deal. As per Justice J. R. Midha, “This court is of the clear view that the (arbitration) order … is enforceable. All the concerned authorities are directed to maintain status quo.”

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Amazon has just sent a legal notice to Future Group for breaching the terms of its contract after a recent deal with Reliance Retail. The second largest Indian retail chain received the notice for selling a portion of its business to the Ambani owned retail chain.

Back in August 2020, Future Group announced that it was selling off its retail and wholesale operations along with its logistics and warehousing business to Reliance Retail for 3.4 billion US Dollars. Although, Future Group already had a deal with Amazon, before the Reliance Retail deal came into play. The e-retail giant had acquired a 49 percent stake in Future Coupons, a subsidiary of Future Group’s real estate business, back in 2019.

The deal also gave Amazon a 3.58 percent stake in Future Retail and right of first refusal to purchase more stake in Future Retail as well. According to a TechCrunch report, local news networks reported on the legal notice, which arrived as Amazon and the Indian firm had a deal that would restrict the Indian firm from entering into a deal with certain other firms.

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The legal notice also arrives amid rumors of Amazon planning on acquiring a multi billion dollar stake in Reliance Retail as well, which is India’s largest retail chain at the moment. Currently, the online retailing segment only accounts for 3 to 7 percent of the total retail sales in the country. Thus, with Reliance Retail launching its own e-commerce business in the region, Amazon and Flipkart would face stiff competition in the market.

Industry analysts have stated that retail is crucial for the future of American e-commerce firms in India. Amazon arrived in the country seven years ago and has since invested more than 6.5 billion US Dollars in the local business. The e-commerce giant has also confirmed that it has filed a legal notice but has refrained from divulging any additional information at the moment. So stay tuned for more updates.

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