Blinkit, Zomato eye merger; $150-million mortgage for cash-dry e-grocer

In what probably presents the primary indicators of unsustainability within the present fast commerce — or q-commerce — mannequin, 10-minute grocery supply firm Blinkit has agreed to merge with food-tech platform Zomato as the previous finds itself in a cash-crunched scenario, two individuals conscious of the matter instructed The Indian Express.

The two firms are learnt to have signed a time period sheet for the all-stock merger, and are anticipated to strategy the Competition Commission of India (CCI) as early as this week searching for its approval.

Meanwhile, Zomato on Tuesday instructed bourses it was extending a $150-million mortgage to Grofers India Pvt Ltd to help the latter’s “capital requirements” within the near-term. It added it was shopping for 16.66 per cent stake in meals robotics firm Mukunda Foods for $5 million. Even because the merger’s trivia are being finalised, it’s learnt that shareholders of Blinkit will get one share of Zomato per 10 shares of Blinkit held, one of many individuals cited above mentioned. Blinkit’s shareholders embrace marquee buyers Softbank and Tiger Global.

Last 12 months, Zomato had invested $100 million in Blinkit for almost 10 per cent stake. The food-tech platform prolonged one other $100 million earlier this month as Blinkit confronted extreme cash-crunch that led to it shutting down over 50 of its darkish shops and shedding a whole bunch of staff. Based on Zomato’s newest market capitalisation, Blinkit’s worth is more likely to be $700-$750 million, one other individual mentioned. Zomato and Blinkit didn’t reply to queries till print.

The e-grocer had pivoted to the 10-minute supply section rebranding itself as Blinkit from Grofers. As per sources, Blinkit and Zomato had been in merger talks since at the very least April 2020.

ExplainedQ-comm begins to consolidate

The merger would mark the start of consolidation within the q-commerce section that has a number of deep-pocketed and new gamers in it. It may additionally probably push firms into adopting extra sustainable enterprise fashions.

Retail specialists have flagged issues with the sustainability of the q-commerce mannequin as these firms promise to make small-ticket sized deliveries with nil or low supply charges, in an effort to amass prospects. However, such a mannequin made the businesses face excessive cash-burn charges, in comparison with the opposite large-format on-line grocers.

Over the final 12 months, the q-commerce section has additionally heated up with a number of deep-pocketed gamers getting into the area. Following Blinkit, Mumbai-based startup Zepto launched 10-minute deliveries, after which gamers akin to Softbank-backed Swiggy, Tata-owned Bigbasket, RIL-backed Dunzo, and ride-hailing large Ola have additionally positioned their bets on the fast supply area.

In the construct as much as the Zomato funding deal, considered one of Grofers’ co-founders, Saurabh Kumar, had exited the corporate final June, though he continues as a board member and shareholder.

In February, Zomato mentioned it had put aside $400 million to spend money on q-commerce, claiming that the section provided a “huge addressable market” and was synergistic with its meals supply enterprise.