Zomato Board Approves Acquisition Of Blinkit For INR 4,447 Cr

SUMMARY

Zomato will acquire Blinkit in an all-stock deal and the transaction is expected to close in early August this year

Zomato Hyperpure, the restaurant supplies grocery subsidiary, will acquire the warehousing and ancillary services business of Hands on Trades Private Limited for INR 60.70 Cr

Zomato plans to keep the Blinkit app and brand separate from Zomato post-acquisition

Food delivery startup Zomato’s board on Friday (June 24) approved the acquisition of quick commerce startup Blinkit for INR 4,447 Cr ($568 Mn) in an all-stock deal.

The transaction is expected to close in early August this year. The quick-commerce startup was valued at $568 Mn for the deal as against earlier reports which said it would be valued at $700 Mn-$800 Mn. Blinkit had entered the coveted unicorn club last year when Zomato bought over 9% stake in it (then Grofers), valuing the startup at $1 Bn.

“We are proposing to acquire Blinkit, a quick commerce business in India and where we first invested in August last year. This foray into the next big category is timely as our existing food business is steadily growing towards profitability,” Zomato founder and CEO Deepinder Goyal said.

Besides, Zomato Hyperpure, the restaurant supplies grocery subsidiary, will acquire the warehousing and ancillary services business of Hands on Trades Private Limited for INR 60.70 Cr.

Zomato plans to keep the Blinkit app and brand separate from Zomato post-acquisition. The Blinkit team, along with its founder Albinder Dhindsa, will continue to run the business.

It must be noted that Dhindsa is married to Zomato cofounder Akriti Chopra. Ahead of its IPO, Zomato had promoted Chopra (in June last year) to the position of cofounder from her then role as Chief Financial Officer. Chopra had joined the startup in 2011 and was listed as the Key Managerial Personnel at Zomato in its DRHP. However, the company did not make any such disclosure in its filings during its investment in Blinkit (in 2021) or during the acquisition, today.

The talks about the acquisition were on for some time. In March, the struggling quick commerce startup had raised a loan of $150 Mn from Zomato, while the food delivery startup also invested $100 Mn in equity.

“The interest rate for the loan will be 12 per cent p.a. or higher with a tenor of not more than 1 year. This loan will support the capital requirements of GIPL (Grofers India Private Limited) in the near term and is in line with our stated intent of investing up to $400 Mn cash in quick commerce in India over the next 2 years,” Zomato had said then.

Explaining how Blinkit fits into Zomato’s business, Goyal said that the quick commerce startup is also a hyperlocal business, just like food delivery, and caters to the need for quick delivery of products for customers.

“Quick commerce will help us increase the customer wallet share spent on our platform and also drive higher frequency and engagement from our customers,” he added.

The proposed acquisition targets have a net debt of about INR 6,731 Mn as on the date of signing, Zomato said in a statement.

Zomato’s net loss widened to INR 1,222.5 Cr in FY22 from INR 816.4 Cr in FY21. In May this year, Blinkit had a gross order value (GOV) of INR 4,02.8 Cr.

Shares of Zomato closed 1.37% higher at INR 70.50 on Friday on the BSE.