Food-delivery unicorn Zomato is reportedly in talks to acquire SoftBank-backed grocery startup Grofers.
According to reports by The Economic Times and Entrackr, the all-stock deal might value the e-grocer at $750mn (around ₹5,700Cr). Reportedly, Softbank is considering investing about $100-$200mn in the merged entity through its VC arm Vision Fund.
According to sources mentioned in the report, if the deal goes through, it will boost Zomato’s positioning against its arch-rival Swiggy, which has been ramping up its grocery delivery vertical.
“The talks are at the company and founder level for now,” said one of the persons cited in the report, requesting anonymity. “If they get more concrete, it will move to the board level.”
Interestingly, it will be worth witnessing how the deal materializes. There are hurdles in the merger’s path since Alibaba is a common investor in Zomato and Grofer’s rival BigBasket.
This development comes at a time when online grocery players such as Big Basket and Grofers have witnessed a tremendous jump in orders due to a Covid-19-induced nationwide lockdown. The lockdown has also led to a significant drop in online food delivery orders.
E-grocery has become so popular that at least more than 10 startups including Meesho, BharatPe and Box8 have recently forayed into the space. Even Swiggy has quickly expanded its grocery presence to 125 cities. Zomato, too, launched its grocery delivery service — Zomato Market — just recently.
“Grofers has been helping Zomato with grocery deliveries,” said another person mentioned in the report. “This partnership could potentially get extended.”
While there hasn’t been any confirmation from either of the parties, if the deal goes through then SoftBank and Alibaba would join hands for the second time in India after Paytm. Alibaba invested in Paytm in 2014 while SoftBank joined the board of the Vijay Shekhar Sharma-led venture in 2017.
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