Finally, after more than a year of speculation, some clarity has emerged on the acquisition deal between OYO and ZO Rooms. In an official statement, OYO has confirmed that it is no longer involved in talks with ZO Rooms for a potential acquisition.
The official statement from OYO said,
In late-2015, OYO explored a potential acquisition of Zo Rooms. The non-binding term sheet for this deal already stands terminated in September 2016. Following this, we tried to identify potential value in their business but could not reach an outcome. We can now confirm that OYO has ended all discussions on the matter.
Inc42 contacted Zo Rooms on the matter but the company declined from commenting on the same.
The OYO Zo Rooms Acquisition Dance Till Now
Zostel Hospitality Private Limited, Zo Room’s parent company, was founded in August 2013 by Dharamveer Chouhan, Akhil Malik, Paavan Nanda, Tarun Tiwari, Chetan Singh Chauhan, Abhishek Bhutra and Siddharth Janghu with an initial corpus of $30K (INR 20 Lakh). The startup has two brands i.e. ZO Rooms and Zostel.
It was in December 2014, when Zostel entered the budget hotel space with Zo Rooms, a chain of premium budget hotels which grew to 750+ properties across 51 cities in India within 10 months of its launch.
The rumours that OYO was looking to acquire Zo Rooms first surfaced in December 2015. It was reported that the budget aggregator OYO was to acquire the smaller rival ZO Rooms in an all-stock deal. As per an ET report, the deal, an asset sale, had been structured in a way that Zo Rooms’ seven founders and investors including Tiger Global would get a combined 7% stake of OYO. The report also stated that – Zo’s founding team would exit the company after the transition is complete.