Ending months of speculation that the two companies had brokered a deal, Amazon today issued a statement saying it will acquire Lovefilm subject to regulatory approval in a deal aimed to close by the end of March. The deal involves Amazon buying all remaining shares it does not already own in the company, while the amount paid has not been disclosed.
In 2008, the American online retailer offloaded its European DVD rental business to Lovefilm and took a 42 per cent stake in the expanded company, which runs an online DVD and games rental-by-post subscription service and also streams films and TV shows over the internet to customers.
Amazon vice president of European retail Greg Greeley comments: ‘Lovefilm has been innovating on behalf of movie rental customers across Europe for many years and with the advent of the Lovefilm player, they are further delighting customers by streaming digital movies for their immediate enjoyment.
‘Lovefilm and Amazon have enjoyed a strong working relationship since Lovefilm acquired Amazon Europe’s DVD rental business in 2008, and we look forward to a productive and innovative future.’
Lovefilm chief executive Simon Calver remarks that ‘the deal is a winner’, adding with ‘Amazon’s unequivocal support’ the company can continue to innovate.
British-born and VC-backed Lovefilm was formed in early 2004 when Arts Alliance Media acquired and rebranded DVDs On Tap and later acquired Boxman.se and Digitarian.dk. It later merged with Video Island in 2006.
In a statement, Lovefilm investors Balderton Capital, DFJ Esprit and Index Ventures welcomed the deal, saying the business has become ‘one of Europe’s great internet success stories’.
Dharmash Mistry, partner at Balderton Capital, says: ‘This is a great deal for Lovefilm and Amazon. Amazon has terrific reach and a family of complementary entertainment businesses providing Lovefilm with the platform to turbo-charge its growth.’
Simon Cook, CEO of DFJ Esprit, earlier this month hinted to GrowthBusiness that a deal was close, saying: ‘There has been a lot of press speculation about how Lovefilm is doing. We shall see what happens there. I am not going to comment.’
Lovefilm operates in the UK, Germany, Sweden, Norway and Denmark and claims to have 1.5 million subscribers.