Amazon’s biggest acquisition in India: Aditya Birla’s Retail Chain for Rs 42 bn

Amazon is the largest e-marketplace across the globe. It recently made the biggest acquisition in India, as the Aditya Birla Group’s retail chain More was acquired by Amazon and home-grown private equity fund Samara Capital.

The exact commercials involved in this deal weren’t revealed due to secrecy measures, however, it is expected to be somewhere in the range of 42 billion. It is said that Amazon will take up the debt at Rs. 40 billion. The debt is run by the AB brand ‘More’. The ABRL has invested a total of Rs 110 billion of personal capital, out of which they have ended with a loss of Rs 70 billion.

The Group did not disclose the value of the deal, but sources said it was around Rs 42 billion. The buyers, they said, would take Rs 40 billion debt in ABRL, which runs stores under the ‘More’ brand. The point to be noted is that Rs 110 billion was raised by a combination of equity and debt of ABRL. A sum of Rs 10 billion was taken by various unlisted group companies.

The acquired company is one of the leading supermarket chain in the country. It is also operating in 490 supermarkets and 20 hypermarkets.

This acquisition is the second acquisition of any brick and mortar structure in India. The first one was that in Shoppers Stop, in which Amazon’s investment arm NV Investment Holdingsacquired close to 5% stake. That deal was monetized for Rs 1.80 billion in September 2017.

In FY17, ABRL posted losses of Rs 6.44 billion, while the sales went up 20 percent to Rs 41.96 billion. The major reasons for ARBL’s fallout were wrong locations of stores, lower margins, heavy expenses, etc.

In the investment realm, Walmart acquired Flipkart. Consequently, Flipkart is also expected to acquire Hotstar to counter against Amazon’s video streaming platform named Amazon Video and Netflix. The air has it, these days. What do you think?



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