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Zomato, Blinkit pens down deal for merger; food tech firm grants $150 million loan to e-grocer

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Online food delivery firm Zomato and online grocer firm Blinkit formerly known as Grofers pens down a merger in an all-stock deal at a down round valuation of $700 million, a sources privy to the development said.

In its last round, Blinkit raised $100 million from Zomato and acquired a unicorn status. This merger deal now marks the beginning of a consolidation in the quick commerce space in India.

The public-listed food-tech firm will soon be approaching the Competition Commission of India for approval. 

With this, stock swap, BLinkit’s lead investor Softbank will hold a 4% stake at Zomato. Softbank has already invested in its rival Swiggy.

The news of a merger comes soon after Zomato, in a disclosure filing with the National Stock Exchange in compliance with the Securities and Exchange Board of India regulations, informed that the company’s board of directors at a meeting on March 15, 2022, had granted a loan of $150 million to Blinkit. 

With the terms of the loans yet to be decided, the loan will support the capital requirements of GIPL (Grofers India Private Limited, or Blinkit) in the near term and is in line with the food-tech company’s intent of investing up to $400 million cash in quick commerce in India over the next two years.

Last month Blinkit also signed a term sheet with Innoven Capital for debt worth $10 million which is coming in three tranches. The company received Rs 25 crore in the first tranche last month.

The cash-strapped q-commerce grocer Blinkit has laid off employees, shuttered dark stores, and delayed some vendor payments, amid intense competition in the newly quick commerce space.

Blinkit in an attempt to cut costs laid staff from Mumbai, Hyderabad, and Kolkata across segments such as riders, pickers, and store managers. The company currently has over 2,000 people on its payroll and 30,000 ground staff. This layoff is likely to have impacted close to 5 percent of the overall strength.

The company also shut down close to 40 dark stores in the last few months bringing the current count to 445 dark stores.  

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