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Sector
Consumer Cyclicals
Size
Small Cap
Market Cap £143.6m
Enterprise Value £350.3m
Revenue £353.8m
Position in Universe 569th / 3000

Amazon to acquire minority stake in an Indian supermarket chain operator

Thu 22nd August, 2019 9:30pm
By Euan Rocha and Nivedita Bhattacharjee
    MUMBAI/BENGALURU, Aug 22 (Reuters) - Amazon.com Inc  AMZN.O 
is set to snag a minority stake in India's Future Retail Ltd
 FRTL.NS , which operates more than 900 stores in India and owns
several supermarket brands, including Big Bazaar.
    In a regulatory filing late on Thursday, Future Retail said
Amazon has agreed to acquire a 49% stake in Future Coupons Ltd.
That entity in turn owns a 7.3% interest in Future Retail,
according to prior regulatory filings. 
    The companies did not disclose the value of the deal, which
gives Amazon a 3.58% stake in the brick-and-mortar retailer,
whose stores sell everything from clothes to fresh produce.
    A source familiar with the matter told Reuters the
transaction valued Future Retail at a "substantial premium" to
its existing market price. 
    Future Retail's market capitalization currently stands at
$2.91 billion, pegging the value of a 3.58% stake in the company
at more than $104 million.   
    Amazon and Future Retail declined to comment on the value of
the transaction that remains subject to regulatory approval. 
    The regulatory filing said the deal gives Amazon the right
of first refusal should Future Retail's founder, Kishore Biyani,
or his family decide to further trim the 47.02% stake they own
in company, both directly and via entities like Future Coupons
that they control.
    The online retailer announced plans on Thursday to launch
its Amazon Fresh service to select areas in India's tech hub of
Bengaluru, the e-commerce company's first such foray into
delivering fresh produce in India, seen its last major growth
market. 
    The Future Retail transaction marks Amazon's second such
move to acquire a stake in an Indian supermarket store operator.
Last year, Amazon and Indian private equity firm Samara Capital
announced a joint investment in an entity that would give Amazon
a stake in Indian supermarket chain More. Amazon also owns a
stake in Indian department store chain Shopper's Stop  SHOP.NS .
 urn:newsml:reuters.com:*:nL3N1W64T7 
    Early this year, India revised its e-commerce rules,
creating hurdles for Amazon and rival Walmart Inc's  WMT.N 
e-commerce subsidiary, Flipkart. One revised rule bars an entity
in which a foreign e-commerce company or its group companies
have a stake from selling on their online platform.
    These and other restrictions forced Amazon to alter how it
structures some of its equity holdings in the country.
 urn:newsml:reuters.com:*:nL3N2020PA urn:newsml:reuters.com:*:nL3N1ZV2PJ
    India's revised e-commerce regulations, along with its push
to compel multinationals to store data locally, have irked the
U.S. government and heightened trade tensions. India has argued
the rules are aimed at protecting interests of its small traders
and privacy of its citizens.  urn:newsml:reuters.com:*:nL4N25G0AI
    Ahead of the launch of Amazon's biggest campus in the world
in the southern Indian city of Hyderabad on Wednesday, Amazon's
India head Amit Agarwal said India should encourage e-commerce
and not try to "define every single guard rail under which it
should operate."  urn:newsml:reuters.com:*:nL4N25H34S

 (Reporting by Euan Rocha in MUMBAI and Nivedita Bhattacharjee
in BENGALURU; Editing by David Gregorio)
 ((euan.rocha@tr.com; +91 22 6180 7257; Reuters Messaging:
euan.rocha.reuters.com@reuters.net))
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