Online food delivery platform Zomato on Friday announced it had acquired quick-commerce platform Blinkit for Rs 4,447 crore (about $568 million) in an all-stock deal.
Zomato already owned more than 9 per cent stake in Blinkit (earlier Grofers).
While the earlier Blinkit deal value was around $700 million, the drop in Zomato's share price reduced it to $568 million.
"This foray into the next big category is timely as our existing food business is steadily growing towards profitability," said Zomato CEO Deepinder Goyal.
Zomato has grown at a CAGR of 86 per cent in the last four years to an adjusted revenue of $710 million "while the adjusted EBITDA margin has improved from (153 per cent) in FY19 to (18 per cent) in FY22", Goyal added.
Zomato's restaurant supplies subsidiary Hyperpure will acquire the warehousing and ancillary services business of Hands on Trade Private Ltd (HOTPL) for Rs 60.7 crore.
Akshant Goyal, Chief Financial Officer, Zomato said the company is not acquiring the B2B trading business as "that no longer fits strategically into our plans".
"Our existing Rs 2,228 million investment in HOTPL is protected through our liquidation preference right," he said.
Blinkit is a quick commerce marketplace delivering grocery and other essentials to customers within minutes (average delivery time of 15 minutes in the month of May).
Blinkit was rebranded from Grofers after a pivot to quick commerce last year. Their erstwhile business model was next-day grocery delivery.
"Blinkit's business pivoted to 100 per cent quick commerce in January 2022 and since then, the business has made tremendous progress on all important and relevant metrics for this business," said Goyal.
In the month of May 2022, Blinkit did gross order value (GOV) of Rs 4,028 million, which is 1/5th of Zomato's monthly average food delivery GOV in Q4 of FY22.
In August last year, Blinkit (then Grofers) raised $100 million from Zomato.
"As a food company, we are already tapping into the large food delivery opportunity in India. In addition to that, we now also want to focus on quick commerce as a natural extension of our food delivery business," said Goyal.
"Quick commerce will help us increase the customer wallet share spent on our platform and also drive higher frequency and engagement from our customers," he added.
The closing of the transaction is expected to happen in early August 2022.
(With inputs from IANS)