Uber Set To Offload 7.8% Stake In Zomato Through A Block Deal

Zomato Q2 Results: Loss Up 35% QoQ To INR 250 Cr On Blinkit Acquisition

SUMMARY

The transaction is likely to be executed at a discount of 2.8%-13.6% to Tuesday’s close

The offer price of $373 Mn for 612 Mn shares is likely based on the lower end of the INR 48-54 price range set for the deal, according to the report

Bank of America Securities will be the sole bookrunner for the deal

Even as Zomato shares hit upper circuit on Tuesday (August 2), it appears that the foodtech giant’s shares may be headed for a decline on the bourses on Wednesday.

According to Reuters, Uber is likely to execute a $373 Mn block deal to sell its 7.8% stake in the Gurugram-based food delivery company on August 3. The transaction is likely to be executed at a discount of 2.8%-13.6% to the latest closing price.

Shares of Zomato rallied 20% on the BSE to settle at around INR 55.60 on Tuesday on the back of better-than-expected financial results for the first quarter of financial year 2022-23 (FY23). The foodtech unicorn nearly halved its losses on a yearly basis to INR 186 Cr, while operating revenue surged 67% year-on-year (YoY) to INR 1,413.9 Cr in Q1 FY23.

The offer price of $373 Mn for 612 Mn shares is likely based on the lower end of the INR 48-54 price range set for the deal, according to a term-sheet reviewed by Reuters.

Bank of America Securities will be the sole bookrunner for the deal.

Zomato’s Tuesday rally came after months of negative investor sentiment around the stock. The shares have been on a freefall for the last few months. Since June 24, when the company announced acquisition of quick-commerce startup Blinkit, its share prices have fallen almost 21% from INR 70.35 to the current level.

From a record high of INR 169.10 in November last year, the decline in share price has wiped off over 67% investors’ wealth.

The block sale has been attributed to Uber’s mounting losses. In its quarterly report for Q2 CY22, Uber reported a net loss of $2.6 Bn, largely on account of its floundering equity investments which formed $1.7 Bn of the total losses.

The problems for Uber have been compounded by driver shortage and rising petrol prices across the globe.

The ride-hailing giant also continues to be under intense scrutiny in India ever since a tranche of controversial data was leaked as part of Uber Files.

This comes just days after a media report hinted at a possible merger between Uber and its competition Ola. Later, the two sides vociferously rubbished the claims, terming the report ‘inaccurate.’