Zomato boosts Blinkit delivery stake for US$568 million
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The top brass of food delivery app Zomato are set to come together on the 17th of June to pen to paper and make the acquisition of Indian based start-up company Blinkit officially complete.
The deal is set to be of a stock exchange type at a ratio of 1:10 where Blinkit will get a share for every 10 shares Zomato gets from Blinkit. Initially, the value of Blinkit was set at around $ 700 million USD but with this type of deal, that value set to have gone down to an extent.
Blinkit is a company that Zomato has been eyeing for a while now as they are a business that focuses on instant deliveries. The company was founded almost a decade ago back in 2013 and its head office is situated in Gurgaon, Haryana. Blinkit is a mobile application that can be downloaded on the play store where its users can order groceries, and other items and essentials through the app from the comfort of their own home. The company even guarantees a 10 minutes delivery time.
A 10-minute delivery time has become the new fad in the delivery business in the country with both Blinkit and Zepto basing their entire business model and marketing strategy on this feature. Zomato has also been piloting their 10-minute delivery feature called Zomato Instant but their Delhi based pilot was not a success. Naturally, delivering food within 10 minutes is much harder than groceries which is why the acquisition of Blinkit is going to be a major boost for them as it will give them crucial help in breaking the 10 minutes barrier which they have been struggling to over the past few months.
Zomato is one of the most popular food delivery apps in India along with Swiggy and the duo have been battling to be most popular food delivery apps for years now. Swiggy however diversified their features and opened their ‘Instamart’ where they sell fruits, vegetables and groceries while Zomato stuck with just partnering up with restaurants and delivering food. But now, Zomato has also dipped their feet into the grocery delivering business with this new acquisition and it will be interesting to see how it will play out.
It seems like this deal will be helping all parties involved as Zomato can improve their 10-minute delivery service with the help of Blinkit’s logistics while Blinkit can increase their operations with the help of Zomato.
Questions & Answers
Q.What is the primary benefit Zomato expects to gain from acquiring Blinkit?
What is the primary benefit Zomato expects to gain from acquiring Blinkit?
The acquisition of Blinkit is expected to give Zomato crucial help in breaking the 10-minute delivery barrier. Delivering groceries within this timeframe is easier than food, addressing Zomato's previous struggles with its own instant delivery pilot.
Q.How will the stock exchange deal structure impact Blinkit's initial valuation?
How will the stock exchange deal structure impact Blinkit's initial valuation?
The stock exchange deal, with a 1:10 ratio, means Blinkit will receive one share for every ten Zomato shares it exchanges. This structure suggests the initial $700 million USD valuation for Blinkit has likely gone down to some extent.
Q.What business model does Blinkit operate, and how long has it been established?
What business model does Blinkit operate, and how long has it been established?
Blinkit is a mobile application focused on instant deliveries of groceries and other essentials, guaranteeing a 10-minute delivery time. The company was founded almost a decade ago in 2013 and is based in Gurgaon, Haryana.
Q.How does this acquisition change Zomato's offerings compared to its competitor, Swiggy?
How does this acquisition change Zomato's offerings compared to its competitor, Swiggy?
Zomato, which previously focused solely on food delivery, has now entered the grocery delivery business through this acquisition. This diversifies its features, similar to how Swiggy diversified with its ‘Instamart’ service.