Amazon.com Inc will be hooked on a 3.58% minority stake in Future Retail of India, which operates more than 1,500 stores in India and owns several supermarket brands, including the supermarket chain and budget department store, Big Bazaar.

Future Retail said in a regulatory presentation Thursday night that Amazon agreed to acquire a 49% stake in Future Coupons Ltd. That entity in turn owns a 7.3% stake in Future Retail, according to previous documents.

The companies did not reveal the value of the agreement, which gives Amazon a stake in one of the largest retail chains in India, whose stores sell everything from clothing to fresh produce.

The online retailer announced plans on Thursday to launch its Amazon Fresh service to select areas in the technological center of Bengaluru, the first incursion of the e-commerce company in the delivery of fresh produce in India, seen its latest large growth market.

The transaction valued Future Retail at a “substantial premium” at its existing market price, a source familiar with the matter told Reuters.
The Economic Times reported that the agreement set the value of the Mumbai-based company at approximately Rs 430 billion ($ 5.98 billion), more than double its current market capitalization of $ 2.91 billion.

The revised e-commerce regulations of India, along with its drive to force multinationals to store data locally, have irritated the US government. UU. And commercial tensions have increased. India has argued that the rules are intended to protect the interests of its small merchants and the privacy of its citizens.

Amazon and Future Retail declined to comment on the value of the transaction that remains subject to regulatory approval.

Future Retail shares fell 5% to 393 rupees in the morning trade in Mumbai, as many investors expected Amazon to buy a 10% stake according to previous media reports. According to reports, the two sides have been in talks for more than a year.

“The previous expectation was that Amazon would invest through a new problem, but now the money goes to the developer and the company is not benefiting,” said Deepak Jasani, senior vice president of HDFC Securities. “People had bought to the expectation, and now they are selling on the news.”

The regulatory presentation said that the agreement gives Amazon the right of first rejection if the founder of Future Retail, Kishore Biyani, or his family decide to cut back the 47.02% stake they own in the company, both directly and through entities like Future Coupons that control.

In addition to more than 290 Big Bazaar outlets, Future Retail also operates a dozen high-end grocery stores under the name of Foodhall. The 7-Eleven Inc convenience store chain has also partnered with Future Retail to operate its stores in the country.

The Future Retail transaction marks Amazon’s second move to acquire a stake in an operator of an Indian supermarket store. Last year, Amazon and Indian private equity firm Samara Capital announced a joint investment in an entity that would give Amazon a stake in the Indian supermarket chain More. Amazon also owns a stake in the Indian department store chain Shopper’s Stop

Amazon and Future Retail declined to comment on the value of the transaction that remains subject to regulatory approval.

The regulatory presentation said that the agreement gives Amazon the right to first rejection if the founder of Future Retail, Kishore Biyani, or his family decide to cut back the 47.02 percent stake they own in the company, both directly and through of entities like Future Coupons that control.

The online retailer announced plans on Thursday to launch its Amazon Fresh service to select areas in the technological center of Bengaluru, the first incursion of the e-commerce company in the delivery of fresh produce in India, seen its latest large growth market.

The Future Retail transaction marks Amazon’s second move to acquire a stake in an operator of an Indian supermarket store. Last year, Amazon and Indian private equity firm Samara Capital announced a joint investment in an entity that would give Amazon a stake in the Indian supermarket chain More. Amazon also owns a stake in the Indian department store chain Shopper’s Stop

Earlier this year, India revised its e-commerce rules, creating obstacles for Amazon and Walmart’s rival e-commerce subsidiary, Flipkart. A revised rule prohibits an entity in which a foreign e-commerce company or its group companies have a share in the sale on its online platform.

These and other restrictions forced Amazon to alter the way it structures some of its capital holdings in the country.

Before Wednesday’s launch of the largest Amazon campus in the world in the city of Hyderabad, in southern India, Amazon chief, India, Amit Agarwal, said India should encourage e-commerce and not try to “define each railing under which it should operate. “

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