After losing Flipkart to Walmart, US-based e-commerce giant Amazon is reportedly in talks with India’s largest brick-and-mortar retail company Future Retail, to acquire a stake.
Future Retail, which is the retail arm of Kishore Biyani-led retail & FMCG giant Future Group, owns physical retail stores such as Big Bazaar and Easy Day.
This development was first reported by FactorDaily, which said, quoting sources, that Amazon is looking to pump in roughly $600 million for a 10% stake in the company.
Quoting a second source, the report further said that the possible deal values Kishore Biyani owned Future Retail at about $6 billion (Rs. 40,872 crore). Amazon might end up spending about $500-600 million to acquire the stake in Future Retail — which has a market cap of $4 billion and is listed on the bourses.
According to an another daily news website, Kishore Biyani and Jeff Bezos had a one-to-one meeting earlier this year to explore a possible deal.
Biyani visited Seattle around January or February to meet with Jeff Bezos, post which executives from Seattle came down to Mumbai to meet with Kishore Biyani and his team. However, discussions had been put on hold after that.
Reportedly, both — Amazon and Future Retail– wanted to wait for the Walmart-Flipkart deal to be over and then make the announcement of possible Amazon-Future Group deal thereafter, and then take things forward.
Future Retail is a listed company with a market cap of over Rs 26,000 crore and has over 900 stores across the country. Kishore Biyani, who has largely been known to criticize e-commerce players, has also made some unsuccessful attempts earlier at e-commerce with Future Bazaar, Big bazaar Direct and the acquisition of FabFurish, all of which were eventually shut down.
Post Walmart-Flipkart deal, the grocery market in India is expected to heat up in the coming months with BigBasket, Grofers, Flipkart, Amazon, Paytm Mall and Future Group lift up their strategies to capture the market.
As a matter of fact, Future Group is currently testing an app for online delivery groceries for EasyDay members through a subscription service on the lines of Amazon Prime. Interestingly, another Indian FMCG player — Adani Wilmar, the company that markets ‘Fortune’ brand of food products in India, is also planning to enter the online grocery sales business with a new e-commerce portal and app called ‘Fortune Online’.
For Amazon, a deal with Biyani-led Future Retail will help the US giant to expand its capabilities in the same omni-channel category. Amazon, through its Amazon Direct and Amazon Fresh services has been looking at entering the grocery segment in India. A deal with Future Retail will also help it have an offline presence and give it access to the large customer base of Future Group.
In the past, Amazon has invested in brick-and-mortar retail companies. In September 2017, it had bought a 5% stake in Shoppers Stop for Rs 175 crore, which was earlier acquired by Future Group for Rs 655 crore, in 2016.
Earlier this year, Future Group has acquired Snapdeal’s logistics arm Vulcan Express, for Rs 35 crores.