What’s Blinkit?, Zomato’s proposed acquisition

Blinkit is a quick commerce marketplace delivering grocery and other essentials to customers within minutes (average delivery time of < 15 minutes in the month of May 2022). Blinkit has visibility into inventory owned by third party distributors and retailers that stock ~4,000 SKUs across a variety of product categories, in a network of warehouses and distributed dark stores. Customers can view and order these products on the Blinkit app. Blinkit also facilitates last-mile delivery of products to customers from the dark stores. The delivery radius for a dark store is typically less than 2 kms, which allows for quick delivery of products.

Blinkit was rebranded from Grofers after a pivot to quick commerce last year. Their erstwhile business model was next-day grocery delivery. Blinkit was the first company in India to get into quick commerce and now we have a number of other players who are getting into this format. Blinkit’s business pivoted to 100% quick commerce in Jan 2022 and since then, the business has made tremendous progress on all important and relevant metrics for this business.

In the month of May 2022, Blinkit did gross order value (GOV) of INR 4,028 million, which is ~1/5th of Zomato’s monthly average food delivery GOV in Q4FY22.

What will Zomato get out of its deal with Blinkit?

Zomato is proposing to fully acquire Blink Commerce Pvt Limited “BCPL”  (where its current ownership is ~9%) and the warehousing and ancillary services business of  Hands on Trades Pvt Ltd “HOTPL”  (together referred to as “Blinkit”).

Corporate Structure of Blinkit

The consideration for the acquisition would be INR 45,082 million (US$ 578 million) paid in the form of :

  • INR 44,475 million (US$ 570 million) for acquisition of BCPL, settled through issue of ~629 million Zomato shares (6.88% equity dilution on a fully diluted basis) at the prescribed preferential allotment price of INR 70.76 per share
  • INR 607 million (US$ 8 million) cash for acquisition of HOTPL Identified Business

Zomato is not acquiring the B2B trading business as that no longer fits strategically into its plans. Its existing INR 2,228 million investment in HOTPL is protected through its liquidation preference right.