Amazon Acquires More, India’s 4th Largest Retail Chain

Amazon Inc and India-focused private equity firm Samara Capital have agreed to buy More, India’s fourth largest food and grocery retailer, from the Aditya Birla Group for Rs 4,200 crore ($579 million), according to reports. This will be Amazon’s biggest acquisition in India, and will mark its entry into the food retail business in India.

Witzig Advisory Services, which is owned by Samara Alternative Investment Fund, will own 51 percent in the company while Amazon will pick up 49 percent stake, media reports said.

This deal is important for Amazon as the world’s largest e-commerce company tries to focus on physical stores in its fight with Walmart, which is now betting big on e-commerce. Earlier this year, Walmart acquired Flipkart, India’s largest e-commerce company, for $16 billion, to counter Amazon.

The board of Aditya Birla Retail (ABRL) on Sept. 19 gave its approval to the deal in which private equity fund Samara Capital acquired the majority 51 percent in ABRL, while Amazon’s investment arm, Amazon.com NV Investment Holdings, bought the balance 49 percent, Financial Express reported, citing sources.

Although an official statement from the the Aditya Birla Group did not mention Amazon’s name, it said that Witzig will buy Aditya Birla Retail, which operates the More supermarket chain, from RKN Retail and Kanishtha Finance. Both of these companies together own 62 percent and 37 percent, respectively, of the retail company. ABRL is the fourth-largest supermarket chain in India, after Future Group, RelianceRetail and DMart.

With this buy, Amazon gets ready access to 575 supermarkets and 20 hypermarkets. The deal will enable the American giant to be a significant player in India’s $400 billion food and grocery business.

This will be Amazon’s second acquisition in the foods and grocery business. In 2017, the company bought American grocery chain Whole Foods for $13.7 billion.

It will also be Amazon’s second investment in an Indian retail chain. In Sept. 2017, Amazon bought a 5 percent stake in Shoppers Stop for Rs 179 crore. The Jeff Bezos-led firm plans to set up about 100-150 stores every year in India, which will mostly be neighborhood stores as well as a few hypermarkets, according to the Economic Times.

The acquisition would add value to Amazon’s omnichannel strategy, Financial Express said. It is already into food and grocery retailing through its online platform, which is currently limited to locations like Mumbai, the National Capital Region, Hyderabad, and Bengaluru.

The online food and grocery business in India reached nearly $1 billion in 2017, according to Nikkei. The market will be worth $5 billion by 2020 with a compound annual growth rate of 72 percent, the report said, citing analysts of RedSeer Consulting.

Amazon is reportedly also in talks to buy a stake in India’s largest retailer Big Bazaar, which is owned by Future Group and Spencers.