Online food ordering and delivery platform Swiggy has reportedly evaluated a potential merger with Zomato, an online restaurant discovery and food ordering startup.
The development was reported by Economic Times. The talks are about a stock-based merger, and if it goes through, it will be the biggest consolidation move in the Indian food-tech space.
The report says that the talks were conducted between both company’s management team in the last week. However, there is no information about the talking points of the meeting or the expected valuation of the transaction.
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.
Sources, who are aware of this development, says that Swiggy has proposed to acquire the food delivery business of Zomato, and the Gurgaon-based startup can continue with the search and restaurant discovery business, along with continuing as a shareholder in Swiggy. 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.
In 2015, at the time when Zomato raised funding, it was valued at around $960 million. On the other hand, Swiggy was valued at around $400 million when it raised funding from Naspers in May this year.
If this goes forward, it will be among the biggest consolidation deal for India’s internet space. So far, the biggest deals include Ola’s acquisition of TaxiForSure and MyMyTrip’s merger with Ibibo. There are several other consolidation deals, including Snapdeal’s acquisition of FreeCharge, Flipkart’s acquisition of Myntra, among others.
Update:
In an emailed response, Swiggy ruled out any such developments. The statement from Swiggy reads,
“Swiggy has a razor-sharp focus in delivering a superior customer experience as we continue to grow as India’s largest food ordering and delivery company. We would not like to comment on baseless speculations such as this.”