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Buzz over Zomato, Blinkit merger

Reports suggest an all-stock collaboration between the two companies
The transaction could see SoftBank Vision Fund, which is the largest investor in Blinkit,  getting a stake in Zomato
The transaction could see SoftBank Vision Fund, which is the largest investor in Blinkit, getting a stake in Zomato
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Our Special Correspondent   |   Mumbai   |   Published 16.03.22, 03:57 AM

Zomato, the online food delivery platform, on Tuesday said it will give a loan of $150 million to quick commerce start-up Blinkit (formerly Grofers) amid reports that the move will eventually lead to an all-stock merger between the two.

In a stock exchange filing after market hours, Zomato said that pursuant to approval received from the board on Tuesday, it is proposing to enter into an agreement to advance a loan to Grofers India Pvt Ltd (GIPL) — a Blinkit arm — for up to $150 million in one or more tranches at an interest rate of 12 per cent for a period of up to one year.

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Zomato acquired a 9 per cent stake in Blinkit last year.

“This loan will support the capital requirements of GIPL in the near term and is in line with our stated intent of investing up to $400 million cash in quick commerce in India over the next two years,’’ Zomato added.

The company was silent on reports of an all-stock merger with Blinkit at a valuation of at least $700 million. The transaction could see SoftBank Vision Fund, which is the largest investor in Blinkit,  getting a stake in Zomato. Apart from SoftBank, some of the other investors include Tiger Global.

SoftBank is also an investor in Zomato rival Swiggy.

In a separate announcement, Zomato disclosed that it will acquire 16.66 per cent of the share capital of Mukunda Foods Pvt Ltd on a fully diluted basis for an aggregate cash consideration of $5 million.

Mukunda Foods is a robotics company that designs and manufactures equipment to automate food preparation for restaurants.

According to Zomato, their products enable restaurants to scale rapidly while maintaining consistency in quality and customer experience across multiple outlets.

The company also helps restaurants to become more efficient by reducing manpower cost, wastage and increase kitchen throughput.

“Our investment will help Mukunda Foods scale faster, help reduce restaurant food prices, expand margins, and enhance customer delight. The proposed investment is subject to fulfilment of certain customary conditions precedent and other terms and conditions agreed under the investment agreement executed between the parties,’’ Zomato added.

Ahead of the announcement, shares of Zomato closed lower by 3.40 per cent at

Rs 76.60.

Softbank move

Softbank managing partner Munish Ravinder Varma has resigned from the board of digital financial services company One97 Communications, which operates under the Paytm brand, and PB Fintech, according to regulatory filings by both the companies on Tuesday, reports PTI.

PB Fintech owns brands such as Policy Bazaar, Paisa Bazaar

Softbank is pulling out its representative from the boards of Indian listed entities Paytm and Policy Bazaar as part of its global policy. There will be, however, no change in investment made by Softbank in these companies, according to a source aware of the development.



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