Zomato to acquire Blinkit for Rs 4,447 crore in all-stock deal; Details here
According to a regulatory filing, Zomato would issue up to 629 million shares, representing a 6.88 percent ownership position on a fully diluted basis, at an allotment price of 70.76 per share. Before the transaction was announced, Zomato shares finished at 70.35 on the BSE, up 1.15 percent.
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FollowZomato, a food delivery platform, has agreed to purchase instant grocery company Blinkit in an all-stock deal for Rs 4,447 crore ($569 million), as it tries to capitalise on a rapidly increasing market for quick grocery delivery.
According to a regulatory filing, Zomato would issue up to 629 million shares, representing a 6.88 percent ownership position on a fully diluted basis, at an allotment price of 70.76 per share. Before the transaction was announced, Zomato shares finished at 70.35 on the BSE, up 1.15 percent.
HOTPL, Blinkit's storage and auxiliary services company, was also bought by Zomato for $8 million. It would not, however, purchase the B2B trading firm since it no longer fits into its strategic ambitions, according to the company.
According to VCCircle, Japan's SoftBank, which owns 46 percent of Blinkit, would receive a 3.2 percent ownership in Zomato as part of the purchase. Tiger Global Management will own around 1.3 percent of Zomato, with Sequoia Capital owning an additional 0.5 percent.
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Other Blinkit (formerly Grofers) investors that stand to gain new Zomato shares include Korea's KTB Ventures, Yuri Milner's Apollete Asia, and Bennet Coleman & Co. Ltd.
Grofers International Pte, the promoter entity of Grofers founders, would get 759 million shares in Zomato, representing a holding of more than 0.8 percent. The Blinkit acquisition highlights the hyper-competitive and cash-hungry character of the fast commerce industry. Blinkit was one of almost 40 unicorns born in India last year. A unicorn is a startup with a valuation of $1 billion or more.
Zomato's new shares will be subject to lock-in periods. "While the statutory lock-in period is six months, we have negotiated a 12-month lock-in period for selling Blinkit stockholders," Zomato noted.
Furthermore, half of the shares belonging to Blinkit founder Albinder Dhindsa will be locked in for two years, with the remaining locked in for a year. The shares corresponding to Blinkit's exercised/vested employee stock options will be locked in for the required six-month term.
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The agreement will provide assistance to Blinkit as competition in rapid commerce has increased. Earlier this year, Blinkit reportedly fired off staff, closed dark storefronts, and delayed certain vendor payments.
According to Zomato, Blinkit's losses fell dramatically between January and May as a result of operating leverage and improved execution. After receiving $120 million from Zomato and Tiger Global, Blinkit will become a unicorn in August 2021. Zomato's investment in Blinkit last year also meant that the site will reintroduce groceries after dropping them a year before.
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