The acquisition also includes the warehousing and ancillary services business of Blinkit’s HOTPL B2B trading business

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Zomato to take full ownership in grocery delivery business Blinkit. (Credit: aymane jdidi from Pixabay)

Zomato has proposed to acquire the remaining stake of around 91% in Blinkit (formerly Grofers), a quick commerce business in India, for INR45.08bn ($578m).

The Indian food delivery service had first invested in Blinkit in August 2021 and currently has a stake of nearly 9%.

The consideration for the acquisition will be paid through $570m worth shares of Zomato and $8m cash for acquiring the warehousing and ancillary services business of Hands on Trades (HOTPL), which is the B2B trading business of Blinkit.

Zomato said that it will not acquire the B2B trading business as it no longer fits strategically into its plan.

Blinkit is engaged in home delivery of grocery and other essentials to customers. Its average delivery time in the month of May 2022 is said to be less than 15 minutes.

The quick commerce business is said to have visibility into inventory owned by third party retailers and distributors stocking nearly 4,000 stock keeping units (SKUs).

Blinkit also enables last-mile delivery of products from the dark stores to customers. The delivery radius for a dark store is usually under 2km.

Last month, Blinkit had INR40.28bn ($510m) in gross order value (GOV), which is nearly 1/5th of the monthly average food delivery GOV of Zomato in Q4FY22.

Zomato founder and CEO Deepinder said: “As a food company, we are already tapping into the large food delivery opportunity in India. In addition to that, we now also want to focus on quick commerce as a natural extension of our food delivery business.

“How is it a natural extension? Because it is also a hyperlocal business, just like food delivery. And, because it also caters to a need for quick delivery of products for our customers.

“Quick commerce will help us increase the customer wallet share spent on our platform and also drive higher frequency and engagement from our customers.”

Post-acquisition, Blinkit app and brand are planned to be kept separate from Zomato.