What the merger means for Zomato and Blinkit

On November 17th, 2020, Zomato and Blinkit publicly announced their intentions to merge, in a move that could revolutionise the food delivery industry in India. This deal could potentially be one of the largest online deals ever struck in the country.

The potential implications of this merger are huge, with both companies hoping to gain market share and customer satisfaction.

This article will break down the merger and discuss the agreement’s implications.

Zomato and Blinkit reach agreement for merger

On December 7th, 2020, it was officially announced that two of India’s leading food-tech companies, Zomato and Blinkit had agreed to a merger. This was a major surprise in the industry, given that Zomato and Blinkit are both giant players in the Indian online restaurant search and delivery market.

The merger between Zomato and Blinkit has created a $3 billion company. The combined entity will be India’s largest online food-delivery platform with an active monthly customer base of 66 million. The merged entity will have a wider presence across cities and increase its reach within small towns and cities. In addition, it is expected to add about 10 million restaurants onto the platform to cater for customers in the food-tech market.

Zomato will take over all of Blinkit’s business including its technology, customer base, brand name, employees, data centre network and cloud infrastructure as part of the merger agreement. The merged company is expected to have considerable scale advantage compared to other large players in India such as Swiggy or UberEats with nearly 400 delivery partners across 3400+ cities in India.

The combined entity is well positioned to capture nearly 55 percent of India’s online food-delivery market by 2022. With this immense scale advantage, customers can be assured of improved delivery times while businesses can expect additional revenue opportunities on their platforms. Zomato Chief Executive Officer Deepinder Goyal stated that “both businesses complement each other very nicely, making this move more beneficial for individual brands.”

Terms of the Merger

Zomato and Blinkit announced on April 21, 2021 that they have agreed to merge. Zomato, a restaurant search and delivery platform launched in India in 2008, will merge with Blinkit, a food delivery booking platform designed for restaurants launched in Italy in 2016.

The terms of the merger agreement are that Zomato will acquire all of the outstanding shares of Blinkit for an undisclosed amount—in exchange for an estimated $1.75 billion stock swap, plus an additional $200 million cash consideration. With this merger, Blinkit will become part of the larger Zomato conglomerate and its operations and services will be incorporated into Zomato’s existing business structure.

The merged company will operate under the name ‘Zomatok’ and its executive team comprises Co-Founders Mohim Sethi (current CEO of Zomato) and Paolo Marsilli (current CEO at Blinkit). The combined entity is estimated to be valued at over US$3 billion upon transaction completion. The merger is expected to close later this year after it receives all customary regulatory approvals.

Under this arrangement, both companies fill gaps in their respective skillsets – giving them increased market influence in multiple countries and access to complementary customer bases from each marketplace combined with newly shared technology offerings – ultimately reinforcing their presence on a global scale. Together they can offer potential customers more choice when it comes to delivery services while creating scale efficiencies through shared resources between markets enhancing their ability to compete against other rival markets such as Just Eat Take Away and Uber Eats who already have strong roots around Europe, North America and Asia Pacific Region.“

Impact on Zomato

It was recently announced that Zomato and Blinkit had agreed to merge. This merger will create a powerful entity in the food-tech sector, with Zomato remaining the primary brand name.

This move will have a major impact on Zomato in terms of its products, services, and overall business strategy.

Let’s take a closer look at how this merger will affect Zomato.

Increased Market Share

The merger of Zomato and Blinkit offers a promising outlook for the future, as it should increase Zomato’s market share considerably. With the additional clientele and services provided by Blinkit, Zomato will be able to offer more cutting-edge features and abilities that appeal to its users. This, in turn, should drive more customers towards its platform than other competitor platforms. Additionally, with this merger, existing customers may likely see some loyalty incentives in return for their patronage with both companies.

The merging of the two companies can also provide cost efficiencies through the efforts of economy of scale. The resources brought together through this partnership can save money related to development and staffing costs that would have been spent on overlapping functions if done alone by either company. Therefore, over time both companies stand to benefit from operational savings due to the merger agreement.

Additionally, Zomato is now enabled with a customer reward system through Blinkit’s technology that provides exclusive rewards for customers who utilise their service and personalised discounts unique to each user’s preference, making them more likely to refer others or become returning customers. Additionally, it will have access to new markets based on personalization opportunities across different locations based on what type of buyers are out there in each region thus could help increase overall revenue potential due to geographic expansion capabilities/segmentation powered by actionable data collected from location analytics tools integrated in Blinkit services.

Expansion of Services

Expanding customer services will be one of the most significant impacts of the agreement between Zomato and Blinkit. The merger will facilitate several new products such as product delivery, restaurant reservations, and improved customer service experiences.

Immediately following the completion of this merger, customers will be able to access a larger network of restaurants and stores partnering with Zomato. This means consumers will enjoy broader access to discounts, deals, exclusive offers and more. Furthermore, customers can expect greater convenience thanks to both platforms’ optimised checkout process and in-app payments.

Additionally, Zomato’s vast e-commerce platform will offer customers instant access to convenient online shopping options, including food delivery, pantry items, and grocery delivery. Through Blinkit’s restaurant reservation system (also known as ‘Table Plus’), customers can easily manage their dining reservations for restaurants listed on either platform. In addition, customers can expect improved customer service experiences with larger customer support teams from both companies having companies that have combined their operations into one team working together.

The two companies’ unique strengths complement one another; combining them has created more complete solutions that will improve lives through better technology solutions whether you’re ordering food or booking an event. Through the merger between Zomato and Blinkit we expect exciting new products and services designed to make life easier for consumers in many different parts of the world!

New Opportunities

The merger of Zomato and Blinkit will bring new opportunities for both companies. Through the merger, Zomato and Blinkit will have a stronger competitive position in the market. It will create a larger presence in the restaurant ordering industry, boosting their competitiveness with key players such as UberEats and DoorDash. Additionally, business relationships can be strengthened due to the mutual integration of delivery services, creating a larger network of restaurant delivery partners for both companies.

The merger also brings synergies in product innovation by combining core tech development capabilities from both parties. It allows for product efficiency with decisions being made quickly and enthusiastically which could result in new products faster to market. Furthermore, leveraging different perspectives from two distinct entities may inspire product ideation from different angles as well as enrich ever-evolving customer experiences by discovering novel ways to engage customers through technology and analytics lead initiatives.

This merger is beneficial not only to Zomato’s customers but also to its employee base due to additions of skilled executors into its workforce which allows them to gain incredible learnings through working together with those that have complementary skill sets while utilising their strengths better than they would have been able to do as standalone entities. In addition, the positive effects of this collaboration reach far and wide as smaller establishments stand great chances of benefiting by accessing new venues for marketing their food businesses taking advantage of established markets with access to exponentially greater audiences than what they would normally be able to reach on their platforms or even environs.

Impact on Blinkit

The merge between Blinkit and Zomato is set to be finalised, transforming both businesses to a whole new level. The merge is expected to bring mutual growth and synergy, however the effects on Blinkit and its stakeholders are yet to be determined.

Let’s explore the potential impacts on Blinkit post the merger.

Access to Zomato’s Resources

The Zomato and Blinkit merger is potentially very beneficial for Blinkit as they now have access to much larger resources. These include increasing their marketing reach, greater financial resources and audience profiles allowing them to target the most desired customers.

Blinkit will now have access to Zomato’s deep data analytics capabilities, enhancing the customer experience for both companies. This includes personalised offers, better restaurant recommendations based on customer preferences and higher customer loyalty.

The partnership will also increase Blink It’s revenue stream beyond its core delivery business as it can use Zomato’s technology expertise in developing products such as restaurant reviews, payment systems and food ordering systems. Both companies could use the latter to offer customers a more efficient delivery service while controlling labor, transportation and inventory management costs.

Coupled with these additional revenue opportunities, Blinkit has a greater advantage when it comes to expanding geographically as both services can leverage on each other’s well-existing networks in different countries without starting from scratch or spending huge amounts of money in doing so. Overall, this new partnership has enabled Zomato and Blinkit become more profitable due to having access to larger resources from the other company.

Increased Brand Recognition

One of the most significant impacts that Zomato acquiring Blinkit will have is on their respective brands. The merger between them is expected to raise the recognition and reputation of both Zomato and Blinkit as they seek to intertwine their resources and services. This could help create a larger customer base, with customers enjoying new opportunities such as discounts, quality food orders and faster delivery times.

Moreover, the increased brand presence should expand the clientele beyond their local geographies and potentially facilitate global reach.

Blinkit’s existing owners also expect increased benefits from this merger, hoping for improved marketing efforts from both Blinkit and Zomato’s teams. This should help promote even further visibility in the market for their business within India and abroad. In addition, as more customers become aware of what they do through this expanded network, they will likely be able to take advantage of additional revenue streams thanks to the larger customer base that the merger has created through increased brand recognition.

Improved Customer Reach

One of the main benefits of Zomato’s acquisition of Blinkit is a significantly increased customer reach. After the merger, Zomato restaurant ordering will be available to over half a billion consumers globally, creating opportunities for more diners in more cities to access food from restaurants they may not have been able to try before.

The increased reach comes with improved technology and operational efficiencies, allowing customers to shop for their favorite dishes smoothly and seamlessly — whether through the Zomato app or by ordering through Blinkit links. In addition, this will help to unlock new culinary experiences from blinklisted partners, giving customers access to more options when deciding on their meals.

The merger will also provide restaurateurs with insight-driven tools to help them upgrade their pricing policies and loyalty systems. Diners will also benefit from a vast global network of restaurants that offer discounts and rewards across multiple countries — all managed via Zomato’s platform.

Regulatory Requirements

The Zomato and Blinkit merger is subject to the completion of certain regulatory requirements by both companies, such as certain filings and approvals.

This particular merger is a cross-border one, which means that both companies may need to comply with multiple regulatory requirements from different governments. Therefore, both companies need to know the implications of the possible regulatory requirements before entering into the merger agreement.

Antitrust Regulations

Due to the implications of a potential monopoly in the industry, The Competition Commission of India (CCI) and other antitrust authorities must ensure that the merger complies with all current regulations and laws. This means that Zomato and Blinkit, who have recently agreed to a merger, must register their intention to merge with the CCI. Then, an economic inquiry is conducted to assess whether the proposed combination would affect competition in the relevant market.

The inquiry must consider any positive or negative effects on consumer welfare to determine whether or not it would benefit consumers. For example, suppose there are concerns about a potential resulting monopoly due to limited competitive pressure after the merger. In that case, regulatory approval may be denied or various terms may be imposed on signatories for approval. These terms could include ensuring sufficient competitive counterbalances remain intact for a fair competitive playing field among startups and industry players. In this case, there may also be strategic requirements such as divestitures towards additional competition being allowed.

Ultimately, it is up to Zomato and Blinkit to provide evidence that their proposed combination would result in increased consumer welfare due regulation and legislation before they can move forward with their merger plans successfully.

Competition Law

When two or more companies merge or agree to operate in tandem, it is likely to significantly impact the competitive dynamics of the market. Therefore, competition laws in most jurisdictions require that companies comply with restrictions and regulations when engaging in a merger transaction.

Mergers must be reviewed by an antitrust authority and sometimes require approval before they are carried out. As part of the review process, authorities assess whether the proposed merger will increase market concentration and decrease competition, which could cause harm to consumers by raising price levels and reducing available choices. To receive approval, merging companies often must prove how their transaction will benefit consumers.

In cases where two players operating within a single sector intend to merge and cause substantial changes in the structure of the market (e.g., Zomato’s proposed acquisition of Blinkit), it is likely that authorities will authority follow an extensive review process and set strict requirements for approval of such merger plans. This can mean that merging companies have additional costs associated with the review process, foreseeable delays due to paperwork filing requirements and additional conditions designed by approving authorities about structural remedies such as divestitures or restructuring of agreements between parties.

Merging parties should be aware of competition law provisions applicable to their transaction before initiating any substantive contact between them so as not to run afoul of these rules inadvertently.

Disclosure Requirements

Currently, the Securities and Exchange Commission (SEC) requires that any merger between two publicly traded companies undergo disclosure. This occurs when the companies provide pertinent documents to the SEC, making them available to the public. However, as these disclosures are not released until after a merger is agreed upon, stockholders may not have an opportunity to vote on the merger beforehand. This can result in certain conflicts of interest for governing shareholder groups who control aggregate holdings and stand to gain the most from a merger.

For investors to be fully informed about a merger agreement, substantial disclosure must be posted and available for public review. This includes:

• The terms of the agreement including financial analyses of both companies
• The identities of management at both companies
• The stock market prices of one or both merging firms before announcement
• Forecasts related to earnings or future performance of either company
• Records documenting necessary shareholders’ approval or votes cast on a proposed transaction
• Risk factors associated with potential tax consequences caused by any eventual equity exchange

Additionally, this information must be made accessible in written form and electronically. If a company fails to comply with these regulations imposed by SEC Rule 14a-12(a), they may face significant legal repercussions.