Zomato-Swiggy Merger: Is Consolidation The New Trend In Food Tech?

Unconfirmed reports have emerged, which predicts a merger between Zomato and Swiggy, two of the popular food ordering apps in India.

If this happens, then the new entity will be easily India’s largest food ordering app, and a solid competitor to global biggie FoodPanda, which has made considerable in-roads in the Indian market.

Has the consolidation in food tech industry started?

Zomato-Swiggy Merger: Is It Possible?

As per some insider reports, management of Bengaluru based Swiggy and Gurgaon based Zomato has already met last week, and negotiations are still on.

While Zomato is aiming for a stock based merger with Swiggy, with separate operations for both the brands; Swiggy wants to manage the operations of the combined entity.

This is where the deadlock appears, and it seems a common path would be soon achieved.

Now, Zomato is also looking forward to a massive investment by Alibaba’s payment affiliate Ant Financial, and this is the reason that they want a stock based merger, and has proposed 4:1 share swap ratio to Swiggy.

A person close to the Zomato-Swiggy Merger development said,

“Swiggy was more interested in exploring the merger at existing valuation, but Zomato’s proposed swap ratio would have valued it at $225 million,”, adding, “Zomato could have continued with the search and restaurant discovery business while continuing as a shareholder in Swiggy,”

It seems that the business goals and objectives are not aligning as of now, and this needs further negotiations and meetings.

But yes, the possibility of a merger is always there, and this merger will be huge. Already analysts are comparing the possible merger of Zomato with Swiggy with Ola and TaxiForSure merger in 2015, and MakeMyTrip and Ibibo merger in 2016.

While Zomato hasn’t replied back, Swiggy said that the company

“has a razor-sharp focus in delivering a superior customer experience as we continue to grow as India’s largest food ordering and delivery company. We would not like to comment on baseless speculations such as this.”

Zomato & Swiggy: How They Compare With Each Other?

As per reports, Zomato is right now clocking close to 3 million orders a month, while Swiggy is able to churn out 4-4.5 million orders a month. However, order value of Zomato is much higher, compared to Swiggy.

Last year, Swiggy claimed 1 million orders a month by registering a growth rate of 25%; while this year in April, Zomato claimed 2 million orders a month, with average order value of Rs 430.

Having said that, there has been some issues regarding the authenticity of Swiggy’s claims, as some whistle-blowers claimed otherwise.

In case Zomato is able to pull off $200 mn investment from Alibaba, they would be valued at $1.1 billion. Last valuation of Zomato happened in 2015, when they were valued at $960 million, after raising a venture funds; while Swiggy is valued at $400 million, after they raised $80 million last year from South Africa based Naspers.

We will keep you updated, as the online food delivery market, valued at $300 million, is staring at a massive consolidation.