Zomato’s board has approved the acquisition of quick-commerce company Blinkit for Rs 4,447 crore ($567 million) in a stock-for-stock deal. As a part of the deal, Zomato will acquire 33,018 equity shares of Blink Commerce Pvt Ltd (BCPL) at a prescribed preferential allotment price of Rs 70.76 per share. Approximately 629 million Zomato shares will be issued on a fully diluted basis in the transaction.
In addition to acquiring Blinkit’s commerce business, Zomato will also be acquiring its warehousing business, Hands on Trade Pvt Ltd (HOTPL), for Rs 607 million ($8 million approximately) in cash. However, the food-aggregator will not be acquiring Blinkit’s B2B trading business, it said.
The deal is expected to close in August 2022 subject to regulatory approval and nod by the shareholders.
“We are proposing to acquire Blinkit, a quick commerce business in India and where we first invested in August last year,” Zomato CEO Deepinder Goyal wrote in a post.
“This foray into the next big category is timely as our existing food business is steadily growing towards profitability – Zomato has grown at a CAGR of 86% in the last 4 years to an adjusted revenue of INR 55.4 billion ($710 million) while the adjusted EBITDA margin has improved from (153%) in FY19 to (18%) in FY22,” he added.
What happens to Blinkit after acquisition?
The Zomato CEO stated on a Q&A page that the company would separate the Blinkit app from Zomato once the deal is finalized. “Zomato brand stands for everything ‘food’ in customers’ minds, while Blinkit is on the path to becoming a brand that customers associate with grocery and essential supplies,” he wrote.
However, the company will ‘experiment with various ideas’ that would enable interoperability between the two apps. “We will explore ways in which Blinkit can benefit from Zomato’s large customer base (and vice versa in the long term). Post the deal closure, we are going to start experimenting with various ideas that we have and see which all bear fruit, including having the Blinkit tab on the Zomato app,” he said adding that Blinkit’s team led by the CEO Albinder Dhindsa will continue to run the business.