zomato acquires blinkit: Zomato board approves Blinkit buy for Rs 4,447 crore

Zomato’s board of directors approved the acquisition of
Blinkit (formerly Grofers), a quick commerce startup, in an all-stock deal at a board meeting held today, according to a BSE filing.

The deal – valued at Rs 4,447 crore or close to $570 million – is close to 43% lower than Blinkit’s last valuation of just over $1 billion. It has turned into a unicorn last year following a $120-million funding from

and Tiger Global.

“We are proposing to acquire Blinkit, a quick commerce business in India and where we first invested in August last year,” Deepinder Goyal, founder & CEO, Zomato, wrote in a letter to the company’s shareholders. “This foray into the next big category is timely as our existing food business is steadily growing towards profitability.”

In the letter, Goyal mentioned thatZomato has grown at a CAGR of 86% 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%) in FY19 to (18%) in FY22.

The acquisition has been announced since both the companies
first explored the deal more than two years ago, as first reported by ET.

Further, moving forward, both Blinkit and Zomato will continue to operate as different brands as well as apps.

“We believe that ‘super brands’ will work better in India than ‘super apps’. We will explore ways in which Blinkit can benefit from Zomato’s large customer base (and vice versa in the long term),” Goyal clarified in the letter. There might be a Blinkit tab on the Zomato app, but the company will experiment with in the future.

The long-anticipated deal will help Zomato, which has been bullish on quick commerce, strengthen its position significantly in the buzzy, ultra-fast grocery delivery space. However, the sector is yet to show signs of turning profitable. The company will compete with well-funded players, including Swiggy’s Instamart, Zepto,

Retail-backed Dunzo, and Tata-owned BigBasket.

During Zomato’s first investor call in May since going public, Goyal had said his company was “very conscious” about not overpaying for Blinkit in the event of a deal .

“We are very conscious that we do not have to overpay for any M&A (merger and acquisition), and we have strong governance processes. We will follow the process and not make any mistake on that front,” he had said.

Zomato has been trying to enter the quick commerce space and had twice dropped plans to deliver groceries online since the start of the pandemic in 2020.

“What changed in the case of quicker deliveries is the product-market fit, and that the customer proposition has become much stronger than
kiranas (brick-and-mortar grocery shops). If we take a city where the gross merchandise value (GMV) for online grocery is stagnating, they (quick commerce apps) are now at multiple times that GMV. The first hurdle was whether it (quick commerce) is a large enough market. On that, we think yes. It is a sustainable business and we also have a synergistic food delivery business,” Akshant Goyal, Zomato’s chief financial officer, had said during the call.

Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.