Online food delivery unicorn Zomato’s board of directors will meet on Friday, June 24, and will likely approve the acquisition of Blinkit, a quick commerce startup, according to a filing with the National Stock Exchange. The filing, however, did not name Blinkit.
“Pursuant to Regulation 29 of Listing Regulations, as amended, this is to inform you that a meeting of the board of directors of Zomato Limited (“the Company”) is scheduled to be held on Friday, June 24, 2022, to discuss a potential acquisition transaction by the Company, the consideration for which may be discharged through the issuance of equity shares of the Company by way of a preferential issue,” the food delivery giant said in the filing.
Zomato-Blinkit Merger – An Eventual Outcome
Zomato has previously held discussions to acquire Blinkit, formerly Grofers, in a share-swap deal. According to a report by Moneycontrol, the deal was supposed to be with Blinkit at a value of $700 million but is likely to be reduced now. The merger has been speculated as an eventual outcome ever since the time Zomato invested in Blinkit. While the contours of the deal are being finalised, it is expected that shareholders of Zomato would get 10 Blinkit shares for each held in their company, sources told Economic Times.
Goyal Bullish on Blinkit
During the Zomato Q4 result media interaction, last month, questions were also asked on media reports of a potential M&A between Zomato and Blinkit. To this, Chief Executive Officer (CEO) Deepinder Goyal replied that the company continues to remain bullish on the quick commerce sector and that Blinkit has grown well in the past six months.
He said, “We continue to remain bullish on quick commerce, especially given how synergic it is to our core food delivery business, and are excited with the progress that Blinkit has made in this space. While there is a lot to do as the business is at its early stages, there’s still a lot of low-hanging fruit to drive growth and efficiency. ”
Goyal added, “Blinkit has grown well in the past six months, and has also significantly reduced its operating losses. We have committed to give them a short-term loan of up to $150 million to fund their short-term capital needs. Beyond that, there is nothing to share at this moment.”
Zomato-Blinkit Deal: Who Gets What
According to an earlier report, Zomato will likely exchange one share for every ten Blinkit shares. Since Zomato initially invested in Blinkit last year, the possibility of a merger has been discussed.
At the time of the merger announcement, it had been reported that SoftBank, which had a 40 per cent stake in Blinkit, will get a 4-5 per cent stake in Zomato as part of the transaction while Tiger Global and Sequoia Capital will get additional shares in the entity, they said, without disclosing further details. According to persons acquainted with the situation who spoke to ET, Blinkit investors may be required to hold Zomato shares for a minimum of six months.
Zomato’s Loan to Blinkit
Zomato announced earlier this year that it has given Blinkit a loan of up to $150 million. Zomato founder Deepinder Goyal claimed that a portion of this money had been delivered to Blinkit during its first investor call since going public last month, and that the rest amount will be released depending on whether it needed it or not.
Zomato was trading at Rs 69.25 on the BSE at the time of filing the story, down from Rs 75-80 levels in March when reports about the acquisition emerged first.