LoveFilm International has struck a deal to acquire's DVD rental business in the UK and Germany.

As part of the transaction, Amazon Europe will make a cast investment (of an undisclosed amount) to become the largest shareholder in LoveFilm International.

The two companies have signed a multi-year marketing deal for Amazon Europe to promote LoveFilm's services on Amazon sites in the UK and Germany.

The deal is subject to regulatory approval in the UK and Germany. But after it is completed, LoveFilm's subscriber base will be more than 900,000 customers in the UK, Germany, Sweden Norway and Denmark.

No staff reductions are planned as a result of the deal. Amazon Europe will continue to operate its DVD rental business on behalf of LoveFilm for a sufficient time after the close fo the transaction to ensure a smooth transition.

'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 vice president of European retail. 'Our investment will enable LoveFilm to grow the business further and we are excited to be part of their future.'

Simon Calver, CEO of LoveFilm International, added: 'This new, bigger customer base will give us an even better position from which to build LoveFilm as the best place for customers to find film.'

LoveFilm International was formed in April 2006 by the equal merger of online DVD rental companies LoveFilm and Video Island (separately founded in 2003). Lovefilm moved into the German market under a September 2006 deal with Deutsche Post and also has a white-label partnership with German exhibitor UCI.

Amazon launched its UK online DVD rental service in 2004 followed by the German service in 2005.