Zomato is looking to buy e-grocer Grofers in an all stock deal

In February, Uber sold its online food delivery program Uber Eats to Zomato. The SoftBank Vision Fund was a major stakeholder in both. After the big acquisition, Zomato is now looking to acquire e-grocery start-up Grofers.

Entracker, in an exclusive report, said that the merger is only in its preliminary stage. But if the merger goes through, Zomato will have the largest market share in terms of e-customers. This potential merger comes after Alibaba reportedly invested $50 million in BigBasket.

The Ant Financial-backed company, Zomato, is currently valued at around $3.2 billion. In retrospect, Grofers is valued at around $650 million. This data comes from the SoftBank Vision Fund's last round of financing in December 2019.

Grofers CEO Albinder Dhindsa declined to comment on the story. A Zomato spokesperson, however, said. “We have partnered with Grofers, along with various FMCG companies, local groceries stores and modern retail chains, to pilot our grocery delivery service. We are not aware of any other conversation with Grofers.”

Due to the COVID-19 lockdown, there has been a tremendous demand in online grocery players such as Big Basket and Grofers. On the contrary, there has been a significant drop in online food delivery orders. E-grocery has become so popular that at least more than 10 startups including Meesho, BharatPe and Box8 have recently forayed into space. Even Zomato (and Swiggy) have entered the grocery delivery market.

SoftBank Vision Fund, the largest shareholder in Grofers, may look to invest around $100-200 million in the merged entity. B0th the Gurgaon Based Start-ups have not commented on the deal yet, Zomato wants to leverage its last-mile expertise in delivery while taking advantage of a wide range of private labels that Grofers manufactures, said ET.

The Indian e-grocery store has been a hub to various merger talks, but nothing has so far been conceived. In 2017, BigBasket and Grofers had explored a potential merger. Also, Amazon had held talks to acquire BigBasket but the discussions did not lead to a fruitful deal.