The e-commerce or the quick commerce market in India space has seen a huge revolution in recent years. Especially in the food and beverages sector i.e., the foodtech sector, the introduction of giants like Swiggy and Zomato has changed the face of the industry and also the consumption pattern of the ultimate consumers.
Also, this is an era of instant food delivery and instant grocery deliveries. Gone are the days when consumers used to visit their local Kirana stores and search for their necessities as well as wait in the long billing queues. This era is of getting things delivered to one’s place at their chosen time and convenience. There are many players in this segment that have tied up with local Kirana stores and also have huge warehouses that can cater to the needs of the ultimate consumers.
Zomato has taken a huge step in this direction and the new merger with Blinkit is said to give the food giant Swiggy tough competition in this market space.
Blinkit, formerly known as Grofers, has recently revamped itself to focus on an instant grocery delivery portal. It has gained huge success by catering to customers by providing them with groceries in 10 minute format. The medium delivery time of Blinkit is approximately 12 minutes.
A huge push towards this goal was through the $100 million investment by Zomato in August 2021. This investment provided Zomato with a 9.3% stake in Blinkit at a valuation of $1billion for the latter. The food aggregator will now further their investment in Blinkit through a merger (or more accurately an acquisition) backed by the strong response to the latter in the instant grocery delivery segment in the form of customer retention, increased order frequency, good customer feedback, etc.
The Zomato-Blinkit merger is in the form of a term sheet that is signed by the companies. A term sheet is a more or less non-binding document that contains a few binding provisions. Such binding terms may include provisions relating to non-solicitation, confidentiality, exclusivity, risk exposure, the timing and the manner of receiving the proceeds, etc. The terms that can later pose a difficulty to renegotiate are usually negotiated in the term sheet. Therefore, it can be said that a term sheet lays the groundwork and the principal alignment of the parties in working or drafting the final acquisition.
Zomato-Blinkit merger was a long-awaited one and has further reduced the number of players in the quick commerce space and foodtech sector. The space only has a few big names now that are competing for significant market share and the proposed merger is seen as providing Zomato the much-needed edge over its biggest rival Swiggy in the long term.
While the news of the merger is welcomed by market pundits and is termed as much-awaited, it has also resulted in a hit on the share price of Zomato and then jumping more than 2% on 16th March. Some experts believe that plunging into a cash-draining business model (which is the key drawback of quick commerce space) while still not making decent profits in their core segment, will put further pressure on the stocks of Zomato, and hence, investors are advised to use caution while investing in the same.
Yes. The Zomato-Blinkit merger is viewed as a lifesaver for the latter as the avenues of fresh capital and funding have seemed to dry up in the current year 2022. The merger will provide a form of bail-out to the company.
The proposed share swap ratio of the Zomato-Blinkit merger is 10:1 where shareholders of Blinkit will get 1 share of Zomato for every 10 shares held in Blinkit.
Yes. The merger of Zomato-Blinkit is valued at a reduced valuation of approximately $700 million to $750 million than its earlier valuation of approximately $1 billion.
This Diwali, we present a portfolio that reflect both sector-specific and stock-specific opportunities. With 2…
Thank you for showing interest in taking a BTST position using our Delivery Plus product.…
Thank you for showing interest in the consultation on trading strategies!Our expert will reach out…
Even if you are a new participant in the stock market, the process of buying…
A company’s debt position can be gauged using the interest coverage ratio or ICR. This…
Muhurat Trading, a cherished tradition in the Indian stock market, takes place on Diwali, the…