NEW DELHI: On Friday, the board of directors of the food delivery behemoth Zomato gave its approval for the company to purchase the quick grocery startup Blinkit, formerly known as Grofers, in an all-stock transaction for the price of Rs 4,447 crore. The value of the transaction, on the other hand, is around 40 percent lower than Blinkit’s valuation of $1 billion from the previous year, when the company became a unicorn after raising $120 million from Zomato and Tiger Global. It is anticipated that the deal will be finalised in the month of August.
“We are considering making an offer to purchase Blinkit, a rapid commerce company based in India, in which we made our initial investment in August of the previous year. Our current food business is heading in the right direction toward profitability, making this venture into the next large category an opportune move “remarked Deepinder Goyal, founder and chief executive officer of Zomato.
Blinkit, which was established by Albinder Dhindsa, competed with BigBasket, an online grocery player, in the next-day delivery category before changing its business model in January to enter the 10-minute delivery space, which is currently dominated by brands such as Swiggy Instamart, Reliance-backed Dunzo, Zepto, and Tata-owned BigBasket. Blinkit was a rival to BigBasket in the next-day delivery category.
Since Zomato began discussing the possibility of acquiring the firm two years ago, Dhindsa has been given the responsibility of heading Blinkit. Zomato intends to keep the food and grocery delivery companies distinct.
“Yes, it is our intention to operate the Blinkit app in a manner that is distinct from Zomato. As was discussed previously, we are of the opinion that “super brands” would prove to be more successful in India than “super applications.” After the transaction has been finalised, we are going to begin testing out a variety of concepts that we have and seeing which ones are successful. One of these concepts includes integrating the Blinkit tab into the Zomato mobile app “said Goyal in a letter to shareholders of the company.
Blinkit is Zomato’s third attempt to get into the market for online grocery shopping; the company has already tried and failed twice before. The large company that specialises in food delivery plans to invest a total of $400 million in cash in the retail sector during the next two years.
“Quick commerce will help us improve the customer wallet share spent on our platform as well as promote better frequency and engagement from our consumers,” added Goyal. “This will help us grow the customer wallet share spent on our platform.”
Blinkit has been provided with a loan of 1,125 crore rupees by Zomato, of which 575 crore rupees is still accessible as cash. In spite of the fact that Zomato is taking on the debt as part of the transaction, the plan anticipates that the company will be in possession of an additional Rs 1,875 crore after the completion of the transaction. This money could be used to finance additional possible investments in the area of speedy commerce.