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Zomato acquires catering aggregator TongueStun in $18 Mn deal: Report

Over the last few months the foodtech space has been buzzing with lot of activities. This is probably reflection of the favorable sentiments that the investment community attaches to the foodtech space; a space that is largely dominated by Zomato and Swiggy.

On Tuesday, this promising and young sector witnessed yet another important activity, after Zomato reportedly acquired TongueStun. For all those who are not aware, TongueStun is a caterers and restaurants aggregation platform.

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Zomato reportedly acquires catering aggregator TongueStun for $18 Mn

However, unlike the recent distress sales witnessed in the foodtech space, this acquisition is reportedly not a distress sale. This acquisition is reported to be pure cash and stock deal, with sources claiming that the deal has been valued around $18 Mn.

Zomato and TongueStun have so far not confirmed the deal. But people familiar with the matter are claiming that the deal is most likely to be confirmed in coming days.

Zomato is most likely to benefit from TongueStun’s strong presence in the corporate segment. The startup, which was founded by Manjunath Ramakrishnan in 2012, counts Accenture, Mindtree, Genpact, Deloitte among its many other high profile corporate clients.

Interestingly, Zomato’s latest acquisition has come closely on the heels of its announcement of delisting non-licenced restaurant partners from its platform. The company was forced to take this tough action to comply with FSSAI’s recent decision to clampdown on non-compliance restaurants.

It goes without saying that delisting will impact Zomato’s monthly orders. Although it is difficult to ascertain whether the latest acquisition has been done to compensate for this loss, this theory cannot be completely ruled out either.

Alibaba backed Zomato has also been in news recently for pursuing investment from SoftBank. With intense competition putting pressure on its cash burn rate, it won’t come as a surprise if the Gurgaon based company raises fresh funds in the coming months.

Closely following Zomato on this fundraising trail is its arch rival Swiggy. The latest buzz is that Swiggy is on the verge of closing $500 Mn fundraising round, which will be reportedly lead by Tencent and other existing investors.

 

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