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Last Updated : Aug 23, 2019 08:03 PM IST | Source: Moneycontrol.com

Amazon-Future Group deal: How is the deal beneficial to both parties?

Kishore Biyani-led Future Group announced on August 22 that ecommerce retailer Amazon would buy 49 percent stake in its group company Future Coupons.

 
 
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Kishore Biyani-led Future Group announced on August 22 that ecommerce retailer Amazon would buy 49 percent stake in its group company Future Coupons.

Future Coupons holds convertible warrants that would amount to about 7.2 percent stake in Future Retail. The deal could thus potentially give Amazon roughly 3.6 percent stake in Future Retail, which operates Big Bazaar and retail outlets such as Easy Day and Heritage Fresh.

Further, Amazon also has the option to buy the rest of the Future Coupons’ stake between years 3 and 10 starting from now.

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Here’s a look at how the deal helps the two entities.

Amazon

The investment will enhance Amazon’s existing portfolio of investments in the payments landscape in India.

Future Coupons is engaged in developing innovative value-added payment products and solutions such as corporate gift cards, loyalty cards, and reward cards primarily for corporate and institutional customers.

Besides, the effective stake in Future Retail means Amazon could use it to prepare a strategy to counter Walmart, which has purchased majority stake in etailer Flipkart.

Future

For Kishore Biyani, this acquisition will help make a wider presence in the digital space.

The stake sale would also help him prepare to compete with Mukesh Ambani’s Reliance Retail, India’s largest retailer, which has widened the gulf between itself and competition.

On August 11, addressing shareholders at the annual general meeting of Reliance Industries , Ambani said that his company is aiming to revolutionize India’s retail industry by connecting as many as 30 million kirana stores, through its offline-to-online initiative.

Sector experts said that the competition in the retail space will intensify with coming together of players such as Amazon-Future and Walmart-Flipkart.

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First Published on Aug 23, 2019 08:03 pm
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