Zomato Board Approves the Acquisition of Blinkit for Rs 4,447 crores

Zomato's board of directors accepted the all-stock acquisition of quick commerce startup Blinkit for Rs 4,447 crores on Friday

Zomato's board of directors accepted the all-stock acquisition of quick commerce startup Blinkit for Rs 4,447 crores on Friday (June 24). The acquisition is likely to be finalised in early August of this year.

Zomato Board Approves the Acquisition of Blinkit

Image Courtesy: Rahul Awasthi

Zomato founder and CEO Deepinder Goyal said in a statement, “We are proposing to acquire Blinkit, a quick commerce business in India and where we first invested in August last year. This foray into the next big category is timely as our existing food business is steadily growing towards profitability.”

Furthermore, Zomato Hyperpure, the restaurant supplies groceries division, would acquire Hands-on Trades Private Ltd's warehousing and ancillary services business for Rs 60.70 crores. After the acquisition, Zomato intends to keep the Blinkit app and brand independent. The acquisition was the subject of lengthy discussions. Zomato offered a $150 million loan to Blinkit in March, along with a $100 million equity investment.

"The loan's interest rate will be at least 12% per year with a maximum term of one year. This loan will allow GIPL (Grofers India Private Limited) to fulfil its short-term capital needs and is consistent with Zomato's stated intention to spend up to $400 million in fast commerce in India over the following two years," which was made at the time.

Goyal explained how Blinkit fits into Zomato's strategy, saying that the rapid commerce company, like food delivery, is a hyperlocal firm that accommodates customers' need for the speedy delivery of products. "Quick commerce will assist us in increasing the customer wallet share spent on our platform, as well as driving increased frequency and engagement from our customers," he added.

According to Zomato, the potential acquisition targets have a net debt of about Rs 6,731 million as of the date of signing. Zomato's net loss jumped from Rs 816.4 Crore in FY21 to Rs 1,222.5 crores in FY22. Blinkit has a gross order value (GOV) of Rs 4,02.8 crores in May of this year. On the BSE, Zomato shares closed 1.37 percent higher at Rs 70.50 on Friday.