NEW DELHI: Food delivery giant Zomato’s board on Friday approved the acquisition of instant grocery startup Blinkit, formerly known as Grofers, for Rs 4,447 crore in an all-stock deal. The deal value, however, is nearly 40% lower than Blinkit’s $1-billion valuation last year, when it turned unicorn by raising $120 million from Zomato and Tiger Global. The transaction is expected to close by August.
“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,” said Deepinder Goyal, founder & CEO at Zomato.
Blinkit, founded by Albinder Dhindsa, was a rival to online grocery player BigBasket in the next-day delivery category before pivoting its business model in January to enter the 10-minute delivery space, currently dominated by brands such as Swiggy Instamart, Reliance-backed Dunzo, Zepto and Tata-owned BigBasket.
Zomato, which first held talks to acquire the startup two years ago, aims to keep the food and grocery delivery businesses separate with Dhindsa leading Blinkit.
“Yes, we plan to keep the Blinkit app and brand separate from Zomato. As we mentioned earlier, we believe that ‘super brands’ will work better in India than ‘super apps’. 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,” said Goyal in a letter to shareholders.
After ditching two previous efforts, Blinkit is Zomato’s third foray into the online grocery space. The food delivery major aims to spend $400 million in cash in quick commerce in two years.
“Quick commerce will help us increase the customer wallet share spent on our platform and also drive higher frequency and engagement from our customers,” said Goyal.
Zomato has extended Rs 1,125 crore as debt to Blinkit of which Rs 575 crore is still available as cash. While the debt is being acquired by Zomato as part of the transaction, it means that Zomato will have an additional Rs 1,875 crore according to the plan for further potential investments in quick commerce.
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