Economy

Zomato Engages In Talks With Swiggy For Possible Merger

But, the ET report suggests that Zomato has proposed a stock-based merger, while the Bengaluru-based Swiggy is keen to acquire and operate the food delivery business of Zomato. However, Zomato is interested in an outright merger at about 4:1 share swap given that it is in talks with Alibaba's Ant Financials for a new funding round. "Zomato also proposed a 4:1 share swap ratio to the food ordering and delivery platform, Swiggy". "Swiggy is looking for a $500-million valuation (up from its previous round), while Zomato wants to strike the deal valuing itself at more than $1 billion", a person close to the matter said.

Rival Swiggy, on the other hand, had raised $80 million from a broad-based multinational internet and media company Naspers earlier this year. Zomato did not reply to email queries on the development.

Founded by Rahul Jaimini, Sriharsha Majety and Nandan Reddy, Swiggy is a food ordering and delivery company based out of Benagluru. If the merger did take place between the two largest players in the online food ordering industry, it would be among the most significant moves made towards consolidating a cash-guzzling sector which has been through a tough last few years.

However, a Swiggy spokerperson termed this a baseless speculation and denied to further comment over it.

Above all, Zomato is still fighting for a leadership in the food delivery space that is right now dominated by the startup competitor Swiggy in India.

On the other hand, Gurgaon-based Zomato is now valued a little above Dollars 960 million and is in talks to raise capital up to USD 200 million from Chinese e-commerce giant Alibaba's payment affiliate Ant Financial, which could elevate the company's valuation to USD 1 billion. "There is an opportunity for growth in the online ordering part of (Zomato's) business but in order to exploit the opportunity fully, (Zomato) will need to up the investments there and that's a conversation which is ongoing", said Sanjeev Bikhchandani, founder of Info Edge, which holds about 46% stake in Zomato on the analyst call on Tuesday.



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