comscore Zomato explored a merger with Swiggy, but talks fell through: Report

Zomato explored a merger with Swiggy, but talks fell through: Report

Swiggy wanted to acquire Zomato's food ordering business only.

  • Published: November 1, 2017 3:24 PM IST

Zomato, which recently turned profitable, is said to have explored a merger with its biggest domestic rival Swiggy. The two food-tech companies held preliminary discussions last week, according to reports. However, nothing concrete emerged owing to differences over business alignment and valuations. While Zomato proposed a 4:1 stock-based merger, Swiggy wanted to buy out its rival’s food delivery business (Zomato Order) only. Also Read - Zomato faces backlash on Twitter after it fires employee calls Hindi a 'national language'

Also Read - Zomato is shutting its grocery delivery in India from September 17

Zomato is scouting for potential partners in the wake of an imminent funding involving Ant Financial, the investment arm of China’s Alibaba. Swiggy, however, doesn’t see much value in Zomato’s restaurant discovery operations. “Swiggy was more interested in exploring the merger at existing valuation, but Zomato’s proposal would have valued it at $225 million,” a source reportedly said. Swiggy was valued at $400 million when it raised $80 million from South Africa’s Naspers Inc earlier this year. ALSO READ: Zomato picks up small stake in Hyderabad-based home-food startup Tinmen Also Read - Zomato invites few lucky customers to get unlimited free deliveries, no surge fees and more

Zomato, on the other hand, is valued at $960 million at present, and would likely cross the $1 billion valuation in its next round of funding. Ant Financial had even explored a potential investment in the Zomato-Swiggy combine if the talks went through. However, both firms’ failure to reach a consensus on several aspects ended discussions. This is not the first time that two leaders in a particular segment of the e-commerce market have failed to agree. The Flipkart-Snapdeal merger too fell through after half a year of negotiations. ALSO READ: Zomato waives commission fee for 70% of partner-restaurants as it turns profitable

Meanwhile, Swiggy and Zomato are vying for the top spot in food-tech. While Zomato is a bigger firm than Swiggy, the core of its business is restaurant discovery. On the food delivery front, Swiggy fulfills more daily orders as well as records higher transaction values. In pursuit of ramping up its delivery unit, Zomato even acquired hyperlocal logistics firm Runnr in September. “With the combination of Zomato and Runnr, we have everything in the stack of building a delightful food delivery service end to end listings, discovery, reviews, ordering, and now, logistics,” Zomato co-founder & CEO Deepinder Goyal had stated.

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  • Published Date: November 1, 2017 3:24 PM IST

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