Zomato and Blinkit are expected to merge in share-swap deal

Online food-delivery provider Zomato is in talks to buy Blinkit, previously Grofers, in a share-swap transaction. This follows Zomato’s $100 million investment in the Gurgaon-based quick-commerce business last year, which gave it 10% ownership. The merger has been forecasted as a possible result of Zomato’s investment in Blinkit.

While the specifics of the deal are still being ironed out, Zomato shareholders are expected to get 10 Blinkit shares for every Zomato share they possess. Blinkit would be valued at around $700-800 million based on Zomato’s current market valuation. This is less than Blinkit’s prior valuation of a little over $1 billion.

Meanwhile, Zomato said in an exchange filing on Tuesday that it will provide Grofers India Pvt Ltd, Blinkit’s Indian subsidiary, a loan of up to $150 million. With a term of no more than a year, interest will be levied at a rate of 12% per year.

As part of the planned share swap, SoftBank Vision Fund, Blinkit’s largest investor, would gain a stake in the food delivery startup. Tiger Global intends to increase its investment in Zomato, which it currently holds.

Swiggy, Zomato’s primary competitor, received a $450 million investment from SoftBank last year. According to the sources, as part of the deal, the Japanese corporation would get a 4-5 percent stake in Zomato.

According to Zomato, the investment is in keeping with the company’s stated objective of investing up to $400 million in India’s fast-food market. The food technology company also announced that it will invest in Mukunda Foods, a food robotics firm, by purchasing a 16.66 percent stake.