Zomato - Blinkit Acquisition

Overview
Reasons
• Zomato (multinational food delivery and restaurant
aggregator company) was looking to have more exposure to
the online grocery segment.
• Zomato acquired Blinkit in an all-stock deal for Rs 4,447 crore.
About 97% of shareholders voted in favour of the deal on July
27.
• Zomato acquired the ancillary service for about $8 million in
cash. It has not acquired the B2B trading business under
HOTPL as it no longer fits strategically with its plans.
• Zomato Hyperpure Private Limited, a material subsidiary of
the company, has acquired the warehousing (Blinkit, formerly
grofers) and ancillary services business of Hands On Trades
Private Limited.
Plans & Pros
• After the acquisition, Zomato plans to start
integrating Blinkit on multiple fronts, starting with
customers and delivery fleets. It may also consider
moving Blinkit to the Zomato app.
• Blinkit is expected to shut most of its own backend
fulfilment warehouses and merge them with
Hyperpure.
• 'super brands' will work better in India than 'super
apps’.
• Delivery fleet can be merged, which could reduce the
delivery charges.
Acquisition History
Cons
• Profitability
• More competitors in quick commerce industry
• Zomato’s investors could face dilution if there is no profit
made combinedly (In FY22, Zomato’s net loss widened by
50% )
• Zomato’s own grocery venture failed in 2020 due to
unscalability.
• An increase in fuel prices has pushed up Zomato’s delivery
cost per order.
• Uber technologies and Tiger Global withdrew their stakes
from Zomato, making it vulnerable.
• "There will certainly be issues if quick commerce dark stores
are operating like the e-commerce marketplaces who strike
deals with big brands and have the ultimate control on
inventory through offshore-related parties," said an advocate
at a Bengaluru-based law firm.