According to the company’s stock exchange filing, Zomato’s board of directors is scheduled to meet on June 24 to consider a potential acquisition by the company. While the filing did not specify the company being considered for acquisition, the board will likely take a call on the acquisition of quick commerce company Blinkit.
Zomato had said in a March 2022 regulatory filing that the food delivery company would be lending around $150 million to Blinkit’s parent, Grofers India. The loan was said to be offered for a tenure of not more than one year, at 12 per cent interest per annum, and the lending was planned to happen in one or more tranches.
In the same month, sources told BusinessLine that Blinkit and Zomato had signed a term sheet for a merger in an all-stock deal valued at $700-800 million. Blinkit also raised around $120 million from Zomato at a $1 billion valuation in June 2021.
In February 2022, Zomato committed to investing $400 million in the quick commerce business over the next two years. The acquisition is expected to be done through the “issuance of equity shares of the company by way of a preferential issue,” the BSE filing noted.
Short-term loan
Commenting on whether Zomato plans to acquire Blinkit, CEO Deepinder Goyal said in the latest shareholder letter, “The company has committed to giving the quick commerce company a short-term loan of up to $150 million to fund its short-term capital needs. Beyond that, there is nothing to share at this moment.”
In Q4 FY22, Zomato saw its net loss widen to ₹359 crore as compared to ₹134 crore in Q4 FY21. However, CEO Deepinder Goyal said the company is being aggressive about conserving cash. Zomato’s consolidated revenue from operations grew to ₹1,212 crore (₹692 crore) in this period. Adjusted EBIDTA loss reduced by 15 per cent to ₹220 crore in Q4 FY22 and adjusted revenue grew 8 per cent quarter-over-quarter to ₹1,540 crore.