Zomato Acquires BlinkIt (Formerly Grofers) For Rs 4447 Crore: BlinkIt Valuation Reduced By 42%

Food delivery company Zomato will acquire quick commerce company Blinkit for Rs 4,447 crore in an all-stock deal.

Blinkit 

Formerly known as Grofers, SoftBank Group-backed Blinkit rebranded itself late last year as its chief promised to speed up deliveries.

It operates in over 20 Indian cities, delivers products ranging from milk, fruits and vegetables to electronics.

Zomato already owns a more than 9% stake in Blinkit.

Terms of the deal

The board has approved acquisition of up to 33,018 equity shares of Blink Commerce Pvt Ltd from its shareholders for a total purchase consideration of ?4,447.48 crore at a price of ?13.45 lakh per equity share.

This transaction will be carried out through issuance and allotment of up to 62.85 crore fully paid-up equity shares of Zomato, having face value of Re 1 each at a price of ?70.76 per equity share.

Zomato’s restaurant supplies subsidiary Hyperpure will acquire the warehousing and ancillary services business of Hands on Trade Private Limited for Rs 60.7 crore.

The Blinkit deal value was earlier estimated to be upwards of $700 million.

However the drop in Zomato’s stock price has reduced it to $568 million at current exchange rates.

Importance to Zomato

Zomato CEO Deepinder Goyal commented that Quick commerce has been the company’s “strategic priority since the last one year”.

The industry has shown rapid growth as customers have found great value in quick delivery of groceries and other essentials.

The move comes as Zomato is looking to capitalize on the booming quick delivery market.

Rivals Swiggy, Reliance Industries-backed Dunzo, Tata-backed BigBasket and Zepto are already active in the space. 

He added that the Blinkit business is also “synergistic with our core food business”.

Financials

Blinkit’s annual turnover in the last three fiscals: Rs 263 crore in FY22, Rs 200 crore in FY21 and Rs 165 crore in FY20.

Its largest shareholder SoftBank will receive 28.71 crore shares of Zomato.

Tiger Global will take home 12.34 crore shares.

BCCL will get 1.5 crore shares.

South Korean investor DAOL will get 3.66 crore shares of the food delivery major.

Sequoia’s shareholding in Zomato will rise from 1.33 crore shares to 5.84 crore shares as it will receive 4.51 crore new shares in the company.

Zomato’s qCommerce craze

For Zomato, Blinkit is a last ditch effort to enter into the grocery space after it retreated twice from the segment- in 2020 and 2021.

Zomato Founder & CEO Deepinder Goyal said that the company has seen the quick commerce industry grow rapidly both in India and globally and that it is also “synergistic with our core food business, giving Zomato the right to win in the long-term.”

Founder background

Grofers which was the earlier avatar of blinkit along with Zomato co-founders Albinder Dhindsa and Deepinder Goyal also go back a long way.

Both of them studied at IIT-Delhi between 2000-2005.

Dhindsa also headed Zomato’s international operations for two years before starting up Grofers.

Albinder’s wife Aakriti Chopra, one of Zomato’s early employees who currently works as Chief People Officer, was recently elevated as co-founder.