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Why is Zomato buying Blinkit in an all-stock deal?

Zomato has proposed to acquire Blinkit in an all-stock deal as it looks to tap the quick commerce space growing rapidly.

Zomato has proposed to acquire Blinkit (erstwhile Grofers) for $570 million after first picking up a stake in the firm in August last year, according to a statement by Zomato. The company expects to close the deal by August 2022, the statement added. Why it matters: Zomato* pivoted to quick commerce in the last year as growth in the food delivery market saturates gradually. The deal may help Zomato lead its diversification effort but the Indian quick commerce is in a nascent stage and exposes the company to cutthroat competition from several players present currently. Why is Zomato acquiring Blinkit: Zomato’s Founder and CEO Deepinder Goyal reasoned that quick commerce is a natural extension of the company’s food delivery business because it relies on a hyperlocal model. “Quick commerce will help us increase the customer wallet share spent on our platform and also drive higher frequency and engagement from our customers,” he wrote in the letter to shareholders. “The peak demand times for food delivery are also complementary to the quick commerce demand peaks in non-meal times,” Zomato’s Chief Financial Officer Akshant Goyal explained in the letter. How will Zomato integrate Blinkit: The company said that the team led by Albinder Dhindsa will continue to run the business on a separate app for now. The company will explore ways in which Blinkit can leverage Zomato’s customer base in the long run. The experiments will start once the deal is completed and the company will look to include the Blinkit tab…

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

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