Prodded by SEBI Zomato Issues Another Clarification on Blinkit Acquisition Deal Value

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Zomato stated that SEBI requested the company to provide a response to the stock exchanges in response to concerns raised by media reports regarding the acquisition of Blinkit

The company said that the price of the deal should be based on only the amount to be paid for the purchase of the targets for acquisition and not include any further investment

Zomato has blamed investors for not completing the online registration process to generate the link for its conference call on June 25 regarding the acquisition

The foodtech company Zomato today (August 2) released another explanation regarding its acquisition of quick-commerce company Blinkit in accordance with the directives by the Securities and Exchange Board of India (SEBI).

In a document with the exchanges Zomato declared that SEBI via an email from August 1, had requested Zomato to provide an answer to the stock exchanges in response to questions raised by reports in the media about the purchase of Blinkit.

Zomato stated that the deal value of the Blinkit acquisition is INR4,500 crore and not 7,500 crore as reported by various media reports. Zomato called the concerns over the matter “factually wrong”.

Zomato had purchased Blinkit for $568 millionin an all-stock deal in June of this year.

Alongside the deal worth, Zomato said it would also assume the debt net in the amount of 673.1 Cr in the balance sheets of two target businesses – Blinkit as well as warehousing, ancillary and warehouse services from Hands on Trades Private Limited (HOTPL).

Zomato, the food delivery service, stated that the price of the deal should only include the price that was paid for the purchase of the acquisition targets proposed and not include future investments in acquisition targets by Zomato.

It claimed that numerous media reports had accounted for the future investments it would make in Blinkit and the loan it gave it to the startup that was quick-commerce as having a amount of INR 7,500 crore.

It is second clarification provided by Zomato regarding the Blinkit acquisition within two days. In the shareholders’ letter released along with the financial statements of the startup for April-June quarter of 2022 on Monday (August 1), Zomato founder and CEO Deepinder Goyal addressed the criticism received by the company on corporate governance concerns related to the acquisition of Blinkit.

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In response to questions about relations with Blinkit CEO Albinder Dhindsa as well as Zomato co-founder Akriti Chopra, Goyal said there was no reason to conceal Chopra and Dhindsa’s wedding and that the board was aware.

“…all parties as well as Akriti herself, ensured that she was not involved in any decisions or discussions in connection with the transaction. We also obtained an opinion of our own from Saraf & Partners on there being no related party transactions in accordance with applicable law,” the CEO said.

In the context of not allowing investors who are not retail investors access to the investors’ conference call on June 25, which will discuss the Blinkit acquisition Zomato said on Tuesday that some investors didn’t complete a required online registration process to be able to creating a link for an investor conference.

“There were registration form which had to be completed prior to which the shareholders were provided an invitation to join the call…Therefore we can say that from our perspective there was no limit regarding the participation of retail shareholders on the conference call and indeed, several retail shareholders participated in on the call” in the document.

This is just one more on the growing list of problems plaguing the food technology giant. The month before, investors complaints to SEBI regarding Zomato’s tardy public disclosures regarding the deal with Blinkit.

In April in April, in April, the Competition Commission of India (CCI) initiated an antitrust investigation at Zomato. Zomato’s stock has also been hit and wiped out more than 62 percent of the wealth of investors over the past nine months.

The decline has been largely attributable to Zomato’s acquisition the cash-sucking Blinkit.

If this wasn’t enough as it was announced the 2nd of August that Uber is expected to sell its 7.8 percent stake in Zomato by a $373 million block agreement on August 3.

Zomato has disclosed almost 50% decrease in its net loss consolidated up to INR 186 Cr for Q1 FY23, down from INR 360 Cr in the previous quarter. Operating revenue increased by 67% over the previous year, and reached INR 1,413.9 Cr.

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