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Internet retail giant Amazon announced Thursday that it has agreed to buy British-based online film and games rental service LoveFilm for an undisclosed amount. Several media reports said that Amazon paid 320 million dollars for the stake it didn’t already own.

The acquisition is good news for a number of Swedish IT entrepreneurs. LoveFilm International was formed from the merger of several DVD rental companies in Europe. Swedish Boxman and Brafilm were among the companies whose founders got paid in cash and stock shares.

“This is the deal that we, the part-owners, have been waiting for”, Jonas Östergaard, co-founder of Brafilm, told business daily Dagens Industri without disclosing how much money he or his Swedish peers landed from the deal.

Prior to the deal, Amazon had a 42 percent stake in LoveFilm, which operates in Britain, Denmark, Germany, Norway and Sweden.

LoveFilm, which has been compared to US video rental group Netflix, has become one of Europe's top film subscription services over the past seven years.

The LoveFilm site boasts 1.4 million members across Europe and offers DVD rental by post and online movie streaming direct to computers, Internet-enabled televisions and other devices. It has a catalogue of 70,000 movies and games.

"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," said Greg Greeley, Amazon's Vice President of European Retail.

The acquisition is expected to close, subject to regulatory approvals, in the first quarter of 2011.

"The deal is a winner for the members who love LoveFilm because of its value, choice, convenience and innovation in home entertainment," said LoveFilm International Chief Executive Simon Calver.

"With Amazon's unequivocal support we can significantly enhance our members' experience across Europe."

Key investors in LoveFilm include European venture firms Balderton Capital, DFJ Esprit and Index Ventures, Dow Jones Newswires reported.

History of LoveFilm
LOVEFiLM International was formed from the merger of two leading VC backed DVD rental companies in Europe. The first, LOVEFiLM formed in early 2004 when Arts Alliance Media acquired and rebranded DVDs On Tap and later acquired Boxman.se and Digitarian.dk. The second, Video Island – originally formed in 2003 by Redbus Group – backed by Balderton, Index and DFJ Esprit merged with ScreenSelect Ltd (also founded in 2003), and acquired Brafilm.se and Brafilm.no. The 50/50 merger between the two companies in 2006 was followed in 2008 by LOVEFiLM International’s acquisition of Amazon’s UK and German online DVD rental customer base.