Film shareholders are set to cash in on Amazon’s buyout of the movie rental business, valuing it at £200m.
Amazon yesterday announced it will snap up the 58 per cent of LoveFilm it does not already own. City A.M. understands Balderton and Index Ventures both own approximately 10 per cent of the firm, with Arts Alliance and DFJ Esprit holding roughly eight per cent each. The remaining 22 per cent is held by angel investors and management.
It is understood Balderton and Index invested “mid single digit millions” in the company, meaning the Amazon buyout represents a sizable return on their investment.
The LoveFilm corporate structure, including chief executive Simon Calver, will remain in place.
Amazon declined to confirm whether its acquisition will be followed by an investment in the firm.
LoveFilm is keen to expand its digital streaming operations, which are understood to represent roughly 20 per cent of its movie consumption. Movie rental firms including LoveFilm and US-based Netflix are understood to have faced difficulties in securing rights to movies, with LoveFilm raising £10m in debt to fund its rights drive. Amazon’s extensive studio relations will be a boon for LoveFilm as digital streaming accelerates with the growing popularity of internet TV.
Charles Gurassa, chairman of LoveFilm said: “The board of LoveFilm are enthusiastic and fully supportive of this transaction which represents a very good outcome for the company, its shareholders and employees.”
LoveFilm narrowed its pre-tax loses to £900,000 in 2009 with its revenue jumping by a third.
Amazon combined its European rental operations with LoveFilm before taking up a 42 per cent stake in 2008. The company has more than 1.4m members and a catalogue of over 67,000 films and games.