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Amazon in talks to buy 8-10% stake in Future Retail; deal to close in weeks

The deal, if it goes through, will help Amazon further strengthen its foothold in the Indian market where it already operates an online marketplace

Press Trust of India  |  New Delhi 

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American e-commerce giant is in advanced stage of discussions with Ltd for picking up 8-10 per cent stake in the Indian retail chain, according to sources.

The deal with the Kishore Biyani-led company is expected to close in the next few weeks, sources close to the development said.

When contacted, India said the company doesn't comment on speculation, while declined to comment.

The deal, if it goes through, will help further strengthen its foothold in the Indian market where it already operates an online marketplace.

The discussions between the two players have been going on for a few months. However, the talks seemed to have been halted after the Indian government tightened FDI rules for e-commerce marketplaces earlier this year.

The new regulations bar online marketplaces with foreign investments from selling products of the in which they hold stakes, and ban exclusive marketing arrangements.

Also, the inventory of a vendor will be seen as controlled by the marketplace if over 25 per cent of the vendor's purchases are from the marketplace entity, including the latter's wholesale unit.

The discussions restarted some weeks ago and the final contours are now being drawn, another source said.

Amazon already has stake in Shoppers Stop and More. would be Amazon's third investment in the Indian brick-and-mortar retail ecosystem.

In 2017, retail major Shoppers Stop had announced raising Rs 179.26 crore from Investment Holdings LLC through an issue of equity shares, which translated to just over 5 per cent shareholding for the American company.

In September last year, Amazon said it has co-invested in Witzig Advisory Services, the entity which had acquired Aditya Birla Retail's 'More' chain of stores in India.

A deal with Future Retail will also help Amazon compete more aggressively against Walmart-backed Flipkart as well as Mukesh Ambani's proposed e-commerce venture.

For Future Retail, the transaction could prove beneficial as it will give the brick-and-mortar chain access to funds as well as expertise for strengthening its own online presence.

As of June 2019, the promoter and promoter group held 47.02 per cent share in Future Retail, which operates hypermarket and supermarket under brands which include Big Bazaar, Easyday, Foodhall, HyperCity, FBB, Heritage fresh, ezone and WH Smith.

First Published: Tue, August 13 2019. 16:50 IST