India’s consumer internet space may be heading for a big consolidation, with sources claiming that Zomato may acquire online grocery platform Grofers in a all-stock deal. If this high profile deal fructifies then this will be Zomato’s second big acquisition following the buyout of UberEats earlier this year.
Softbank backed Grofers, which of late has been buoyed by the skyrocketing demand in the aftermath of coronavirus lockdown, is likely to be valued at approximately $750 Mn, sources have said. The sources further add that Grofers’ largest investor SoftBank may invest $100 Mn – 200 Mn in the merged entity.
The acquisition discussion between the two companies, both of which are based in Gurgaon, comes closely on the heels of their recent grocery delivery partnership. This partnership was aimed at giving boost to Zomato’s latest offering Zomato Market, which purely deals with grocery delivery.
Grofers purchase will supposedly help the ant financial backed company in consolidating its newly launched grocery business. Online grocery delivery has apparently become the new battleground that has pitted several startups against each other. As lockdown took toll on the grocery supply lines, as many as 10 startups joined the bandwagon of starting grocery delivery business. This includes well-known startups like Meesho, BharatPe and Box8.
Swiggy’s recent aggressive push to grow in the grocery space is also hard to overlook. The Bengaluru headquartered startup recently raised INR 264 Cr from Tencent & others to propel its grocery business.
However, notwithstanding the recent skyrocketing demand, online grocery is not an easy business to pull off. The fact that grocery major BigBasket has become a major acquisition target speak volumes about the same. Rumors have been rife in the market BigBasket was involved in a merger talks with Amazon and Zomato but these talks have reportedly collapsed.
The online grocery space suffers from wafer thin profit margin, thereby bringing immense stress on the balance sheet.