Zomato rescues Blinkit, signs up for merger in all stock deal

Online food delivery firm Zomato and online grocer Blinkit has signed up for a merger in an all stock deal which is likely to be at a down round for a valuation of $700 million, sources privy to the development. Blinkit last raised $100 million from Zomato in a round which gave the company a unicorn status.

The deal signals towards the beginning of a consolidation in the quick commerce space in India.

The public listed food-tech firm will be approaching the Competition Commission of India for an approval soon. Following the stock swap, Blinkit's lead investor Softbank will get around 4 percent stake in Zomato. It must be noted that Softbank already is an investor in rival Swiggy.

The development happens at a time when Blinkit has laid off employees, shuttered dark stores, and delayed some vendor payments, amid intense competition in the quick commerce space.

Zomato's last investment in Blinkit happened for a 10 percent stake at a valuation of a billion dollar just before its initial public offering in July last year. While Blinkit was supposed to raise a further $500 million from Zomato, this hasn't materialised due to current market conditions, where new-age tech stocks have been hammered.