LoveFilm inks broad pact with Amazon

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LONDON -- Amazon on Monday announced it will become the largest shareholder in U.K.-based DVD rentals-by-post operation LoveFilm International. No financial details were released.

Amazon said that it will make a cash investment in LoveFilm as part of a deal that will see the rentals-by-post operator acquire Amazon Europe's DVD rental business in the U.K. and Germany.

The two companies will also enter into a multiyear marketing agreement in which Amazon Europe will promote LoveFilm's services on its sites for U.K. and German customers.

Completion of the deal is subject to regulatory approval in the U.K. and Germany.

Following completion of the deal, the new LoveFilm subscriber base will total more than 900,000 customers predominantly in the U.K. and Germany, but also in the Nordics (Sweden, Norway and Denmark).

"As one of Europe's largest online DVD rental businesses, LoveFilm is well established to serve customers' increasing demand for entertainment," said Greg Greeley, Amazon's vp of European retail. "Our investment will enable LoveFilm to grow the business further and we are excited to be part of their future."

LoveFilm International Ltd. was formed in 2006 from the 50-50 merger between LoveFilm, an Arts Alliance Media founded company, and Video Island Ltd., a business backed by three leading European VCs: Index Ventures, Balderton Capital and DFJ Esprit.

Amazon Europe said it will continue to operate the DVD rental business on behalf of LoveFilm for a period of time following the close of the transaction to ensure an efficient transition and smooth customer experience. No staff reductions are planned at Amazon's German or U.K. operations as a result of the business transfer.
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