So on June 17th, Zomato may call a general meeting to clear the acquisition of quick commerce startup Blinkit, formerly Grofers, almost two years after the two entities first discussed a potential acquisition.
Zomato had previously capitalised on Blinkit and extended a loan of up to $150 million for the quick-commerce entity earlier this year.
According to sources, the deal is tied to a certain number of Zomato shares that Blinkit’s investors will receive as a part of the share-swap deal. Blinkit’s investors are also expected to have a lock-in period of six months.
After the deal, Blinkit’s shareholders are expected to get a little less than a 10% stake in Zomato. One of the above sources said Blinkit’s largest investor, SoftBank Vision Fund, will get an almost 4% stake in Zomato.
The deal was likely to value Blinkit at around $700-800 million based on Zomato’s market capitalization at the time. That was less than Blinkit’s previous valuation of slightly over $1 billion.
Furthermore, shareholders of Zomato are expected to get 10 Blinkit shares for each held in their company, and the merger has been rumoured as an ultimate consequence ever since Zomato first financed Blinkit.
At Zomato’s first investor call in May, its first since going public last year, CEO Deepinder Goyal said the company was “very conscious” about not overpaying for Blinkit. He stated that they are very conscious that they do not have to overpay for any M&A (merger and acquisition) and have strong governance processes.
“We will follow the process and not make any mistakes on that front,” he added when asked how Zomato would value the Blinkit deal.
Zomato has been trying to enter the quick commerce space since twice dropping plans to deliver groceries online since the start of the pandemic in 2020.
It is a sustainable business and we also have a synergistic food delivery business, “said Akshant Goyal, chief financial officer, Zomato, but Zomato is now expected to hunker down on investments amid adverse market conditions and a downturn in technology stocks globally. Zomato’s stock closed at Rs. 69.9 on Monday, down 3.1% from the previous market close on Friday. It is still trading at a significant discount to its all-time high of Rs. 169.10 in November 2021.