The board of food delivery company Zomato on June 24 approved the acquisition of quick commerce company Blinkit for Rs 4,447 crore in an all-stock deal.
Also, Zomato’s restaurant supplies subsidiary Hyperpure will acquire the warehousing and ancillary services business of Hands on Trade Private Limited for Rs 60.7 crore.
While the Blinkit deal value was earlier estimated to be upwards of $700 million, the drop in Zomato’s stock price has reduced it to $568 million at current exchange rates.
“Quick commerce has been our stated strategic priority since the last one year. We have seen this industry grow rapidly both in India and globally, as customers have found great value in quick delivery of groceries and other essentials,” said Zomato CEO Deepinder Goyal.
“This business is also synergistic with our core food business, giving Zomato the right to win in the long-term… This foray into the next big category is timely as our existing food business is steadily growing towards profitability,” he added.
The filing also revealed Blinkit’s annual turnover in the last three fiscals: Rs 263 crore in FY22, Rs 200 crore in FY21 and Rs 165 crore in FY20.
According to the deal terms, Blinkit’s largest shareholder SoftBank will receive 28.71 crore shares of Zomato, Tiger Global will take home 12.34 crore shares, BCCL will get 1.5 crore shares and South Korean investor DAOL will get 3.66 crore shares of the food delivery major.
Sequoia’s shareholding in Zomato will rise from 1.33 crore shares to 5.84 crore shares as it will receive 4.51 crore new shares in the company.
In August last year, Blinkit (then Grofers) had raised $100 million from Zomato in a round which gave the company a unicorn status.
Subsequently, Zomato had also extended a lifeline to cash-strapped Blinkit through a loan of $150 million to parent company Grofers India Private Limited (GIPL). The food delivery company said in its earnings call recently that the entire amount had not been disbursed, and the rest will be given out depending on whether the company needs it.
“The interest rate for the loan will be 12 percent per annum or higher with a tenor of not more than one year. This loan will support the capital requirements of GIPL in the near term and is in line with our stated intent to invest $400 million cash in quick commerce in India over the next two years,” the listed foodtech company had said at the time in a filing with the exchanges.
For Zomato, Blinkit is a last ditch effort to enter into the grocery space after it retreated twice from the segment – in 2020 and 2021. Last year, the company had said that its bet on the grocery space in the future will be through its investment in Blinkit.
Grofers and Zomato co-founders Albinder Dhindsa and Deepinder Goyal also go back a long way. Both of them studied at IIT-Delhi between 2000-2005. Dhindsa also headed Zomato’s international operations for two years before starting up Grofers. Albinder’s wife Aakriti Chopra, one of Zomato’s early employees who currently works as Chief People Officer, was recently elevated as co-founder, in recognition of her contributions to the company.
Zomato shares rose 1.15 percent to Rs 70.35 apiece on the BSE on Friday.