Zomato may buy Grofers in an all-stock deal valuing e-grocer at $750M – ETtech



In what may presumably emerge as an enormous consolidation transfer in India’s shopper internet sector, meals supply and restaurant discovery platform Zomato is learnt to be in talks to accumulate online grocery retailing startup Grofers in an all-stock deal, mentioned two individuals in the know.Grofers, which has seen heightened demand in the previous few weeks on the again of the Covid-19 pandemic, is anticipated to be valued at round $750 million, these individuals mentioned. Japanese conglomerate SoftBank Vision Fund, the most important shareholder in Grofers, may look to speculate round $100-200 million in the merged entity, sources near the matter mentioned.

The dialogue between the 2 Gurgaon-based firms comes on the again of a current partnership that Zomato and Grofers struck for grocery delivery, as reported first by ET. This concerned Zomato Market, its newly launched grocery providing, fulfill buyer orders from offline shops which have an current tie-up with Grofers.

If the transaction goes by, it is going to be the second huge buyout by Zomato which acquired the Indian operations of UberEats earlier this 12 months to bolster its meals-supply providing in the home market.

Read: Groceries turn essential for startup survivalThe Ant Financial-backed firm is at the moment valued at around $3.2 billion whereas Grofers was valued at round $650 million, as per its final spherical of financing led by SoftBank Vision Fund in December final 12 months. Sequoia Capital, the Silicon Valley-based enterprise capital fund, is a standard early investor in the 2 firms.

“They have been engaged in talks over the past few weeks sensing a big opportunity in the grocery segment. Their pilot run across Delhi NCR seems to have clocked high order numbers to start with, further strengthening the ongoing negotiations,” mentioned an individual in the know.

Graphic: Rahul Awasthi
Graphic: Rahul Awasthi

Zomato needs to leverage its final-mile experience in supply whereas making the most of a variety of personal labels that Grofers manufactures.

While the margins in the grocery enterprise are low, an added capital infusion from SoftBank will give each the businesses ammunition to combat BigBasket which is backed by Alibaba, Swiggy and the likes of Amazon and Flipkart in the long run. Zomato’s lead investor is Ant Financial, an affiliate of Alibaba. Interestingly, SoftBank can also be a big shareholder in Uber and is now an investor in Zomato after the UberEats India sale.

Albinder Dhindsa, cofounder & CEO of Grofers, didn’t reply to ET’s question whereas a Zomato spokesperson mentioned, “We have partnered with Grofers, along with FMCG companies, local groceries stores, and modern retail chains, to pilot our grocery delivery service. We are not aware of any other conversation with Grofers.” A SoftBank spokesperson mentioned, “We can’t touch upon hypothesis.”

Graphic: Rahul Awasthi
Graphic: Rahul Awasthi

“Grocery delivery has always been on our long-term radar since it fits into our vision of ‘better food for more people’,” Goyal had instructed ET final week. “Food delivery and grocery are the two highest repeat cases for urban consumers. Over the last few months, before the coronavirus crisis, food delivery volumes had started to plateau,” mentioned an investor instantly conscious of the deal. “Expansion to adjacent businesses is the only way to grow,” he mentioned.

“Alibaba which is an investor in BigBasket was keen to merge it with Grofers and Zomato. However, it was not an easy deal to pull off,” mentioned a supply on the situation of anonymity.

The Indian e-grocery market has witnessed a bunch of those merger talks being held earlier than as properly however no deal has come by to this point. In 2017, BigBasket and Grofers had explored a possible merger whereas Amazon had held talks to acquire BigBasket however the discussions didn’t fructify right into a deal.

Note: The story has been up to date with SoftBank’s response.

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