Online food delivery giant Zomato has approved the acquisition of Blinkit for Rs 4,447 crore in an all-stock deal. The company in a regulatory filing said that its board had approved to acquire the quick delivery ecommerce platform, earlier known as Grofers. Zomato will acquire up to 33,018 equity shares of Blink Commerce Pvt Ltd (BCPL) through the deal, according to a BSE filing. The Zomato Blinkit deal was on the cards for months, and was being anticipated to happen on this day.
“The board of directors of Zomato Limited…at its meeting held today i.e., June 24, 2022 inter-alia, has considered and approved the…acquisition of up to 33,018 equity shares of Blink Commerce Private Limited (formerly known as Grofers India Private Limited) for a total purchase consideration of Rs 444 7,4 7,84,078 at a price of Rs 13,46,986.01 per equity share by issuance and allotment of up to 62,85,30,012 fully paid-up equity shares of the company having a face value of Rs 1 each at a price of Rs 70.76 (Indian Rupees Seventy and Seventy Six Paisa Only) per equity share,” Zomato said in the BSE filing dated June 14, Friday.
Here is Everything You Need to Know About the Zomato Blinkit Deal:
– CEO Deepinder Goyal said that this foray into the next big category is timely as Zomato’s existing food business is steadily growing towards profitability. “Zomato has grown at a CAGR of 86 per cent in the last 4 years to an adjusted
revenue of Rs 55.4 billion ($710 million) while the adjusted EBITDA margin has improved from (153 per cent) in FY19 to (18 per cent) in FY22,” he said. On the other hand, Blinkit revenue was at Rs 236 crore in FY22 compared to Rs 200 crore in FY21.
– Zomato has already given $150 million to Blinkit in loans, and is willing to bear upto $400 million in losses for Blinkit. “We have extended Rs 1,125 crore as debt to Blinkit(of w hich Rs 575 crore is still available as cash with Blinkit) – this debt is being acquired by Zomato as part of the transaction. This means that we have an additional Rs 1,875 crore as per the plan for further potential investments in quick commerce going forward,” said Zomato founder Deepinder Goyal.
– A large part of this capital will g towards funding losses for Blinkit, Goyal further said. “This capital would be funded from the Rs 12,219 crore cash on our balance sheet (as of March 31, 2022),” he added.
– Blinkit founder Albinder Dhindsa will continue to run the business along with the team, Zomato has confirmed. The Zomato Blinkit deal will be carried out through the issuance and allotment of up to 62.85 crore equity shares on preferential basis for consideration other than cash. Zomato plans to keep the Blinkit app and brand separate from Zomato. “Zomato brand stands for everything ‘food’ in customers’ minds, while Blinkit is on the path to becoming a brand that customers associate with grocery and essential supplied,” said Goyal.