BENGALURU: The board of directors of online food delivery platform Zomato on Friday approved the acquisition of quick commerce start-up Blinkit (formerly Grofers) for Rs 4,447.5 crore ($570 million) in an all-stock deal.
Blinkit was last valued at over $1 billion, and this deal is at least 41% lower than its last valuation.
Earlier, it was said that the food delivery platform will buy Blinkit for about $700 million. This acquisition comes at a time when Blinkit scaled down its business in many cities and started focusing more on 10-minute grocery delivery.
The closing of the transaction is expected to happen in early August 2022. The Blinkit team, led by Albinder Dhindsa will continue to run the business. Earlier, Zomato provided a short-term loan of up to $150 million to fund Blinkit’s capital needs.
“We have extended Rs 1,125 crore as debt to Blinkit(of which Rs 575 crore is still available as cash with Blinkit) - this debt is being acquired by Zomato as part of the transaction. This means that we have an additional Rs 1,875 crore as per the plan for further potential investments in quick commerce going forward,” Zomato founder and CEO Deepinder Goyal said.
Most of this capital will go towards funding losses in Blinkit during the remainder of CY22 and CY23. “This capital would be funded from the Rs 12,219 crore cash on our balance sheet (as of March 31, 2022),” Goyal added. Goyal said Zomato’s food business is trending towards profitability faster than they had thought at the time of IPO, last year.
This acquisition pushed Zomato in its quick commerce play. While the total commerce market in India is $1.3 trillion, and in the long term, Zomato sees quick commerce emerging as a significant channel of demand for customers at least in the top cities. In the month of May 2022, Blinkit did a gross order value (GOV) of Rs 403 crore, which is approximately one-fifth of Zomato’s monthly average food delivery GOV (gross order value) in Q4FY22.