Aug 21: Leading online retailer Amazon is looking to fortify its brick and mortar presence in the country with plans for acquiring a stake in Aditya Birla’s More retail chain of stores. The move comes on the backdrop of global retailer Walmart stepping into India with the acquisition of Amazon rival Flipkart.
As per the report, Amazon is planning to form a consortium with Goldman and Sachs and Samara Capital to grab a stake in More. Amazon is expected to pick up a heavy stake of up to 49% in the separate company by donning the role of a strategic partner.
The deal is expected to value More in between $644 and $715 million (Rs 4500-5000 crore). Private Equity fund Samara Capital is also believed to have previously struck an exclusivity deal with Aditya Birla Retail Ltd for bilateral negotiations. Samara has approached Goldman Sachs and Amazon, with Goldman Sachs acting as the vehicle within the investment bank for the deal.
As per the current investment laws of the country, stake of foreign companies in multi-brand retailers like More shall not exceed 49%. However, companies usually bypass the norm by creating holding entities in cash-and-carrying retailing, in which 100% investment to foreign companies are allowed.
Amazon has already picked up measures to solidify its physical presence in the country. During September last year, the retailer has bought a 5% stake in department store chain Shoppers Stop for Rs 180 crore. Acquisition of More would not just help Amazon gear up against Walmart, but also with other players like Reliance Retail and Future Retail, the former which is expected to gain big in the coming days.
Despite being run under losses, More is still the India’s fourth largest retail store chain with over 493 supermarkets and 20 hypermarkets to its name. The retail space of the brand spans to over 2 million square feet across the country.