According to a filing with the National Stock Exchange, the board of directors of online food delivery unicorn Zomato will meet on Friday, June 24 and will likely approve the acquisition of Blinkit, an instant commerce startup. However, Blinkit was not named in the filing.
“In accordance with Regulation 29 of the Listing Regulations, as amended, you are informed that a meeting of the Board of Directors of Zomato Limited (“The Company”) is scheduled to be held on Friday, the 24th June, 2022, to discuss a Potential takeover transaction by the company, for which may be discharged through issuance of equity shares of the company through preferential issue,” the food delivery giant said in the filing.
Zomato-Blinkit Merger – One Final Result
Zomato has previously been in talks to acquire Blinkit, formerly Grofers, in a share-swap deal. According to a report in Moneycontrol, the deal was supposed to be worth $700 million with Blinkit, but is now likely to be cut short. Ever since Zomato invested in Blinkit, the merger is being treated as an end result. While the contours of the deal are being finalized, Zomato shareholders are expected to get 10 Blinkit shares for every one they hold in their company, sources told The Economic Times.
Goyal Bullish on Blinkit
During the Zomato Q4 result media interaction last month, questions were also raised on media reports of a possible M&A between Zomato and Blinkit. To this, Chief Executive Officer (CEO) Deepinder Goyal replied that the company remains consistent on the accelerated commerce segment and Blinkit has made decent growth in the last six months.
He said, “We remain consistent on Accelerated Commerce, especially given how synergistic it is to our core food delivery business, and are excited by the progress Blinkit has made in this area. As the business is in its early stages, there is still little hanging fruit to drive growth and efficiency.”
Goel said, “Blinkit has seen decent growth over the past six months, and its operating losses have also come down significantly. We have committed to provide them with short-term loans of up to $150 million to meet their short-term capital needs. Other than that, there is nothing to share at this time.”
Zomato-Blinkit Deal: Who Gets What?
As per an earlier report, Zomato will exchange one share for every ten Blinkit shares. Since Zomato initially invested in Blinkit last year, the possibility of a merger has been discussed.
At the time of the merger announcement, it was reported that SoftBank, which had a 40 per cent stake in Blinkit, would get a 4-5 per cent stake in Zomato as part of the transaction, while Tiger Global and Sequoia Capital would get an additional one. shares in the entity, he said without disclosing further details. According to people who spoke to ET, Blinkit investors may have to hold Zomato shares for at least six months.
Zomato’s loan to Blinkit
Zomato announced earlier this year that it has extended a loan of up to $150 million to Blinkit. Zomato founder Deepinder Goyal claimed that a part of this money was given to Blinkit during its first investor call since going public last month, and the rest will be released based on whether it needs it or not.
At the time of filing the story, Zomato was trading at Rs 69.25 on BSE, down from Rs 75-80 levels in March, when reports about the acquisition first surfaced.
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