Amazon India’s Biggest Acquisition Is Birla’s More Retail: Checkout 4 Interesting Facts!
This acquisition will mean that Amazon's food retail business is all set to expand and grow in India.
Amazon has just accomplished its biggest acquisition in India, and have thus cemented their position in the food and grocery market.
In the month of April, we had reported that Amazon can acquire More, which has now been confirmed.
Checkout 5 interesting facts about this mega-deal, which has been programmed as such to comply with India’s FDI rules as well.
Fact #1: Main Participants Of The Deal
Officially speaking, Witzig Advisory Services will acquire More retail chain from Aditya Birla Retail Ltd (ABRL).
Now, Witzig Advisory Services is owned by Samara Alternative Investment Fund. And Amazon will pool in money into Witzig Advisory Services.
As of now Amazon will buy 35% stake of More retail, which will be eventually increased to 49%. Hence, Samara and Amazon India will own 51% and 49% share respectively of More Retail.
After Big Bazaar, Reliance Retail and DMart, More is the biggest retail chain in India.
Fact #2: Size Of The Deal?
As per report by ET, the deal is pegged at Rs 4200 crore, which will be shared by Amazon and Samara both.
Aditya Birla Retail Ltd (ABRL) which owned More brand of retail chains had a debt of Rs 4000 crore, which will be wiped off after this deal.
Amazon will have control over 500+ retail outlets of More.
The deal was confirmed when RKN Retail, which owns Aditya Birla Retail Ltd (ABRL) along with Kanishtha Finance and Investment Pvt, informed the BSE that the Board has approved the sale.
Fact #3: But What About FDI?
More than 51% FDI in multibrand retail is not allowed in India, whereas 100% FDI is allowed in the cash-n-carry wholesale businesses, which sell directly to other businesses.
Now, Amazon, which is an International entity, will invest their money in Witzig Advisory Services, which has no restriction on FDI.
Moreover, once the acquisition is completed, Amazon will control only 49% stake in More retail, which again falls under the FDI rules.
Hence, Witzig, which will actually own More retail will be treated as a domestically controlled financial vehicle by regulatory authorities. Legally, this acquisition is covered.
Fact #4: What Will Amazon Do Now?
As per the Indian laws, Amazon India will continue to operate as a marketplace platform for ecommerce.
However, now as they have control over More retail, Amazon can now market directly to the offline customers, via More stores. And offline to online model is expected now, as Amazon will have access to More’s inventory and location both.
Maybe in the coming days, we can witness a model wherein Amazon customers can order More products online, and then pick them up from the stores. Amazon is keen to expand their presence in the food and grocery vertical in India, and now, they have the perfect opportunity.
In terms of size, this will be Amazon’s biggest acquisition in India.
Image Source: https://entrackr.com/2018/09/samara-amazon-acquire-more/