One of India’s largest retail chain More is now acquired for an enterprise value of Rs. 42 billion. The board of Aditya Birla Retail Limited (ABRL) gave an approval to the deal on Wednesday according to which Witzig Advisory Services owned by private equity fund Samara Capital acquired the majority 51% in ABRL, while the rest will eventually be bought by Amazon.com NV Investment Holdings which presently holds 35% stake.
The deal will help ABRL clear its debt of around Rs 4,000 crore as on March 2018. The new owners are in plans of opening 100-150 stores every year whose current strength is 575. Samara Capital had signed an exclusive agreement with ABRL in June and was in negotiations with both Amazon and Goldman Sachs but the latter exited the consortium.
“At the moment, it looks like a Samara play but Amazon is looking at it from a long-term view. For Amazon, India is a strategic market and there are obvious synergies in terms of omnichannel presence,” said Devangshu Dutta, chief executive at consultancy firm Third Eyesight. “The retail market will gradually move away from traditional trade and there will be an overlap between consumers for modern trade and online channel.”
Looks like Amazon is continuing to give a tough competition to its US rival Walmart which bought a majority stake in Flipkart. Both the companies have been tinkering in cross-channel acquisitions. Amazon acquired grocery chain Whole Foods and also launched an autonomous store Amazon Go in Seattle. It picked up a 5% stake of Shoppers Stop for Rs. 180 crore last year. Walmart is also binge shopping and has added retail stores like Modcloth, Moosejaw to strengthen its stance.
Aditya Birla’s More is the country’s fourth largest retail store after Future Group’s Big Bazaar, Reliance Retail, and DMart. This acquisition will help Amazon become a bigger player in the $400-billion offline food and grocery market, of which many online players are trying to get a share of. Most Indians still prefer shopping offline as compared to the ever-growing online market.
*Sources: The Economic Times