SUMMARY
Zomato acquired the warehousing and ancillary services of HOTPL for $8 Mn and will park it under Hyperpure
The foodtech major announced completion of the Zomato-Blinkit deal for INR 4,447 Cr on August 10
The Zomato-Blinkit deal faced a lot of scrutiny and allegations of late disclosure and a lack of corporate governance
Hyperpure, zomato
’s B2B restaurant supply business, has acquired Blinkit’s warehousing and ancillary services business, Hands On Trades Private Limited (HOTPL), according to a disclosure made by the foodtech giant with the Bombay Stock Exchange (BSE).
Zomato acquired the warehousing and ancillary services of HOTPL for $8 Mn.
“This is to further inform the exchange that Zomato Hyperpure Private Limited, material subsidiary of the Company, has acquired the warehousing and ancillary services business of Hands On Trades Private Limited,” the foodtech major said in the disclosure dated August 10.
Zomato passed on acquiring the B2B trading business under HOTPL as it no longer fits its plans, per a letter to the shareholders dated June 24, 2022. It only targeted Blinkit’s marketplace business and HOTPL’s warehousing and ancillary service in the acquisition.
“Our existing INR 222.8 Cr investment in HOTPL is protected through our liquidation preference right,” Zomato added in the said letter.
According to the organisational structure proposed by Zomato prior to the acquisition in the aforementioned letter to the shareholders, HOTPL would be housed under Hyperpure, while Blinkit’s marketplace business would be parallel to Zomato’s existing business.
The same disclosure also announced the completion of the deal which saw Zomato acquire Blinkit for INR 4,447 Cr.
The stakeholders’ relationship committee of its board in a meeting approved the allotment of around 62.85 Cr fully paid-up equity shares of the company to acquire 33,018 equity shares of Blink Commerce India Private Limited (BCPL).
“Further, the Company has completed [the] acquisition of 100% shareholding of BCPL from its shareholders. Accordingly, BCPL became a wholly owned subsidiary of the Company with immediate effect i.e. from August 10, 2022,” said Zomato about the acquisition.
Even as Zomato’s share price plummeted in the immediate aftermath of the Blinkit acquisition, about 97% of the foodtech major’s shareholders approved the acquisition.
Blinkit’s acquisition also raised questions about corporate governance within Zomato, as Blinkit’s founder Albinder Dhindsa is married to Zomato’s cofounder and chief people officer, Akriti Chopra.
The foodtech major failed to disclose the aforementioned relationship, which could have resulted in a conflict of interest, hence the allegations of a lack of corporate governance.
In an earnings call after announcing the financial results for the quarter ended June 2022, Zomato CEO Deepinder Goyal addressed the issue. He said that Chopra and Dhindsa’s marriage was nothing to hide and that the board was aware of the same as well.
“…all parties, including Akriti herself, made sure that she was never involved in any discussions or decisions with respect to the transaction. We also took an independent opinion from Saraf & Partners on there being no related party transaction under applicable law,” Goyal added.
Zomato’s share price was trading at INR 60 apiece at today noon (August 12), rallying over the last 15 days or so after hitting an all-time intraday low of INR 40.55 apiece.
The foodtech major’s largest acquisition to date, Blinkit is a quick commerce unicorn and competes with the likes of Dunzo, Zepto and more importantly, Swiggy Instamart. Zomato’s move came after multiple rounds of lending and investing in Blinkit, clearly shaping up for an acquisition.
However, Swiggy’s move to buy Dineout from Times Internet, which saw it get in direct competition with Zomato’s dining out services (Zomato’s original business) prompted Zomato to acquire Blinkit entirely to compete with Swiggy’s Instamart.
