AbstractZomato announced the acquisition of Blinkit on June 24, 2022, for a total price of 568 million (Rs. 4447 crore) in equity. The company's valuation was reportedly around 800 million before the acquisition. Shareholders of Blinkit will receive one Zomato share for every ten Blinkit shares. Zomato made a 100 million investment in Blinkit (formerly known as Grofers) earlier in March 2022 in exchange for a stake of over 10%. According to the deal terms, Blinkit's largest shareholder Soft Bank will receive 28. 71 crore shares of Zomato, Tiger Global will take home 12. 34 crore shares, BCCL will get 1. 5 crore shares, and South Korean investor DAOL will get 3. 66 crore shares of the food delivery major. The success in quick commerce is heavily dependent on an efficient hyperlocal delivery network. Zomato has a natural advantage here given the millions of food orders that it deliver. The acquisition marks a signiant milestone in the quick delivery start-up industry. This acquisition paves a milestone in quick delivery start-up system. The case raises an important strategic question: should bigger companies buy lossmaking company for long term financial gains? Will you do the same for your business too?
Saha et al. (Thu,) studied this question.