Zomato buys Blinkit for ₹4,508 crore in all-stock deal

Food delivery platform Zomato on Friday received its board approval to acquire e-grocery startup Blinkit (formerly Grofers) for ₹4,447 crore ($569 million) in an all-stock deal. The deal is part of the company’s strategy to exploit online grocery retail, a business segment that has seen robust growth during the Covid-19 pandemic.

As per the deal, Zomato will acquire around 33,018 equity shares of Blinkit for ₹4,447 crore at a price of ₹13.47 lakh per share through the issuance of up to 62.9 crore shares, equivalent to an equity stake of 6.88% on a fully-diluted basis, at an allotment price of ₹70.76 per share, it says in a regulatory filing.

“The company presently holds 1 equity share and 3,248 preference shares in Blink Commerce Private Limited (formerly known as Grofers India Private Limited) (BCPL),” the release noted.

Zomato will also acquire Blinkit’s warehousing and ancillary services business HOTPL for ₹60.7 crore ($8 million).

Commenting on the deal, Deepinder Goyal, founder and CEO of Zomato, says, “Quick commerce has been our stated strategic priority since the last one year. We have seen this industry grow rapidly both in India and globally, as customers have found great value in quick delivery of groceries and other essentials. This business is also synergistic with our core food business, giving Zomato the right to win in the long-term.”

“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 – Zomato has grown at a CAGR of 86% in the last 4 years to an adjusted revenue of ₹5,540 crore ($710 million) while the adjusted EBITDA margin has improved from (153%) in FY19 to (18%) in FY22,” he wrote in a letter to shareholders.

Last year, the company had invested $100 million (around ₹745 crore) for acquiring around 9% stake in Blinkit. The transaction has been already approved by the Competition Commission of India (CCI). In March this year, Zomato’s board approved granting a loan of up to $150 million (around ₹1,145 crore) to Blinkit. The interest rate for the loan was 12% per annum with a tenor of not more than 1 year. This loan intended to support the capital requirements of Blinkit in the near term and was in line with Zomato’s commitment to invest up to $400 million cash in quick commerce in India over the next 2 years.