The Zomato board approved the acquisition of Blinkit for Rs. 4,447 billion

The purchase of rapid commerce business Blinkit for Rs 4,447 crore in an all-stock deal was authorised by the board of food delivery company Zomato on June 24.

Additionally, Hands on Trade Private Limited's storage and auxiliary services company will be purchased by Hyperpure, a subsidiary of Zomato that sells restaurant supplies, for Rs 60.7 crore.

The Blinkit deal's value was once believed to be around $700 million, but at the current exchange rate, it is only worth $568 million due to the decline in Zomato's stock price.

Since the last year, "quick commerce" has been our stated strategic focus. Customers have found significant value in receiving groceries and other necessities quickly delivered, according to Zomato CEO Deepinder Goyal, which has led to this industry's rapid growth both in India and internationally.

"This company works well with our primary food business, allowing Zomato the chance to succeed in the long run... Our current food business is steadily developing toward profitability, so this entry into the next big area is timely," he continued.

Blinkit's yearly revenue for the previous three fiscal years was also disclosed in the filing: Rs 263 crore in FY22, Rs 200 crore in FY21, and Rs 165 crore in FY20.

In accordance with the terms of the agreement, SoftBank, the largest shareholder in Blinkit, would receive 28.71 crore Zomato shares, followed by Tiger Global with 12.34 crore, BCCL with 1.5 crore, and South Korean investor DAOL with 3.66 crore.

Sequoia will receive 4.51 crore additional shares in Zomato, increasing its ownership in the company from 1.33 crore to 5.84 crore shares.

Blinkit (formerly Grofers) received $100 million from Zomato in a funding round in August of last year, elevating the business to unicorn status.

Zomato had then provided a lifeline to cash-strapped Blinkit by loaning its parent business Grofers India Private Limited $150 million (GIPL). In a recent earnings call, the meal delivery business disclosed that not the complete sum had yet been distributed and that the remaining funds would be distributed based on the business's needs.

"The loan's interest rate will be 12 percent or more per year with a maximum term of one year. This loan will help GIPL meet its short-term capital needs and is consistent with the company's stated intention to spend $400 million in fast commerce in India over the following two years, according to a filing with the markets at the time.

After withdrawing from the market twice, in 2020 and 2021, Zomato is making one last ditch effort to penetrate the supermarket market with Blinkit. The corporation had previously stated that its investment in Blinkit would be their future wager on the supermarket market.

Albinder Dhindsa and Deepinder Goyal, co-founders of Grofers and Zomato, have a lengthy history together. Between 2000 to 2005, both of them attended IIT-Delhi. Prior to founding Grofers, Dhindsa oversaw Zomato's foreign operations for two years. Aakriti Chopra, Albinder's wife, was recently promoted to co-founder in honour of her contributions to the firm. She was one of Zomato's first workers and currently serves as Chief People Officer.

On the BSE on Friday, Zomato shares increased 1.15 percent to Rs 70.35 a share.