In a development that might shake up India's online food distribution ecosystem, Swiggy and Zomato held backstage conversations to discuss the modalities of a potential merger. Since the cut-throat rivalry in the online food distribution network forced them to exhaust billions in draw volume and capture market share, the two Indian unicorns are looking for partnership.

Lockdown due to the COVID-19 pandemic further deteriorates the situation with two companies reporting the lowest volumes ever. Moreover, the entry of Amazon in the online food delivery business in India is also considered to have played a critical role in merger talks.

Akshar Pathak, Twitter

As per a report in ETNow, the talks are in the primary stage with no official confirmation. In fact, Swiggy has denied any such developments. Meanwhile, the sources have informed that Swiggy and Zomato held the first round of talks to deliberate a potential merger just ahead of lockdown. The initial round of talks failed due to non-agreement on management control of the merged entity.

Chinese companies biggest investors in two entities

Chinese internet 'superpowers' Tencent Holdings Ltd and Ant Financial are in reality the biggest shareholders of two India's two food delivery unicorns. Over a bigger piece of market share in electronic payments and digital payments both at home turf and internationally, the two tech Chinese powerhouses have pumped million into India.


Although Tencent is one of Zomato's largest shareholders, other food discoveries and delivery investors include Naspers, Hillhouse, Coatur, DST, Wellington Management, Hadley Harbor and Meituan Dianping, China's delivery platform. In the latest round of funding in January 2020 of worth US $ 150 million from Ant Financial, the valuation of the company jumped over $ 3 billion. Jack Ma led Alibaba has also invested $ 210 million. As of November 2018, Ant Financial holds 23% in Zomato.

Swiggy's investors include DST Global, Meituan, Coatue Management, Tencent, and Hillhouse Capital, besides several other private equity and venture capital investors.