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Future Retail

Amazon acquires 49% stake in Kishore Biyani’s Future Coupons

Future Retail

Ending all speculations and reports around the percentage of stake acquisition in Future Retail, the world’s largest e-commerce firm Amazon has acquired 49% stake in Future Coupon led by Kishore Biyani.

According to a regulatory filing at BSE, the Jeff Bezos-led firm has agreed to make an equity investment in Future Coupons Limited for acquiring a 49% stake comprising both, voting and non-voting shares.

Since Future Retail can’t directly sell stake in Amazon, so it is routing it through one of its entities – Future Coupon – that owns about 7.3% stake in Future Retail (as per old regulatory filing quoted by TechCrunch).

Only last week, a Bloomberg report suggested that Amazon would acquire close to 10% stake by paying $281 million in Future Retail. While Future Coupons’ current stake in Future Retail is not known, the equity stake to be acquired by Amazon in Biyani’s retail business couldn’t be ascertained.

“As part of the agreement, Amazon has been granted a call option. This call option allows Amazon to acquire all or part of the Promoters’ shareholding in Future Retail Ltd, and is exercisable between the 3rd to 10th years, in certain circumstances, subject to applicable law,” reveals the filing.

The financial details of the transaction are still awaited.

Over the past couple of years, Amazon has been buying stakes in offline retailers to ramp up its game against rival Walmart with an omnichannel approach.

The very concept which Walmart has been trying in its local market – the US. In 2017, Amazon had acquired 5% equity stake in Shoppers Stop and later in September 2018, it bought a 49% stake in More Retail, a buyout led by private equity firm Samara Capital. The e-commerce behemoth seems to leverage More in its just-launched grocery dedicated e-vertical – Amazon Store.

Coming back to Amazon’s deep interest in India retail business, the acquisition would be somewhat similar to Walmart-Flipkart deal, where we have seen a collaboration of e-commerce with retail.

Amazon and Walmart are already engaged in e-commerce rivalry in India, and recently, both conglomerates have been locking horns on the offline retail front as well. Walmart recent meeting with Tata Group for a strategic alliance in the country to fight the Seattle-based firm validates this point.

For Amazon, which has opened its biggest office building in the world in the Indian city of Hyderabad, the deal will open several avenues to leverage Future Group’s strong offline presence in the country.

Currently, Future Retails count of 1,557 stores and presence in 437 Indian cities. With stakes in three popular brick&mortar chains and food retail licence, Amazon has been busy in stitching missing pieces of modern retail (aka O2O).

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