Zomato To Buy Struggling Blinkit in an All Stock Deal: Reports

Zomato.

(Photo Courtesy: Twitter)

Food delivery giant Zomato is set to acquire 10-minute delivery service Blinkit, formerly known as Grofers, several reports suggest as of Wednesday, 16 March.

Blinkit, led by Albinder Dhindsa, recently secured a $100 million investment and a $150 million loan from Zomato, according to The Economic Times. The two were in talks over a possible merger last year.

The transaction involves an all-stock deal that values Blinkit between $700 million and $800 million, Mint reported quoting sources. This is a significant drop from the unicorn status Blinkit had achieved last year after investments from Zomato and Tiger Global.

Zomato currently owns a 10 percent stake in Blinkit.

Blinkit's Troubles

The lowered valuation could be a result of Blinkit struggles to find profitability in the face of stiff competition. Uncertainty in the market due to the Russia-Ukraine crisis may have also played a part.

Blinkit pioneered the quick delivery of groceries with the help of dark stores. It pivoted from a grocery delivery service to a 10-minute delivery service in September 2021 and changed its name in December.

It is in competition with instant delivery services like Dunzo (backed by Reliance and Google), Swiggy's Instamart, Zepto (backed by Y combinator) and Tata Group-owned Big Basket.

Blinkit's business model revolves around 10-minute deliveries of essentials which are often heavily discounted, making it unviable without deep pockets.

The company laid off employees, shut several of its dark stores, and delayed some vendor payments in the past weeks, according to Moneycontrol.

It also introduced surge pricing last week, presumably in an attempt to generate more revenue.

This merger could be beneficial for both parties, since Zomato has been looking to get a slice of the q-commerce pie like its arch rival Swiggy has.

In its third-quarter earnings report, it said it is aggressively expanding into the quick-commerce segment and will invest $400 million over the next two years in the category.

“Blinkit is the closest to how we all know the quick-commerce business today. Blinkit pioneered 10-minute grocery delivery in India, post our $100 million investment in August 2021," it said.

(With inputs from Moneycontrol, The Economic Times, and Mint.)