Amazon to acquire VC-backed LoveFilm

The £200m deal means an exit for venture firms Balderton Capital, DFJ Esprit and Index Ventures.

Balderton Capital, DFJ Esprit and Index Ventures have sold their minority stakes in the DVD rental business to Amazon for £200 million (€237 million; $318 million),a source with knowledge of the deal has confirmed.

LoveFilm: providing
private equity returns

The three London-based venture capital firms each held approximately a 10 percent minority position in LoveFilm, which offers customers DVD rentals by post or via its on-demand digital video library.

Amazon, which before the agreement held a 42 percent stake in the company, agreed a £200 million deal with Balderton Capital, DFJ Esprit and Index Ventures to gain a majority stake, the source said. 

Amazon has held a stake in LoveFilm since 2008 when its European DVD rental division was sold to the company in exchange for the minority holding. 

Since inception, LoveFilm has accumulated roughly 1.5 million subscribers across Europe, a figure achieved in part through its merger with Video Island in 2006.

Video Island was launched in 2003 with series A funding from Index Ventures and what is now known as Balderton Capital. In 2004 the company received series B funding alongside newcomer DFJ Espirit.

Dharmash Mistry, a  partner at Balderton Capital, highlighted Amazon’s “terrific reach”, in a statement, adding the online retailer would provide ”LoveFilm with the platform to turbocharge its growth”. 

LoveFilm is the Netflix of Europe and it will be central to Amazon’s European and global strategy

Dharmash Mistry

“LoveFilm is the Netflix of Europe and it will be central to Amazon’s European and global strategy”, said Mistry.

The rental company reportedly considered an IPO in 2009 following abandoned talks with private equity firms including Kohlberg Kravis Roberts and Silver Lake Partners.

The acquisition, subject to regulatory approvals, is expected to close before the end of the first quarter.