Amazon has announced it is to buy a stake in film rental firm Lovefilm.

Under the terms of the deal, Amazon will hand over its UK and German DVD rental business in return for an estimated 30 percent stake in Lovefilm. The service, which offers delivers rented DVDs though your letterbox, will also be promoted on Amazon's European sites.

The deal, which has yet to be approved by regulatory bodies, could cause concern for competitors. Lovefilm already has a 70 percent share of the rental-by-post market, while Amazon's smaller share has continued to grow.