Zomato sizzles on acquiring minority stakes in Grofers, Hands-on Trades

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Zomato rose 1.52% to Rs 137.05 after the company said that it has completed the process of acquiring minority stakes in Grofers India and Hands-on Trades for an aggregate consideration of Rs 741.04 crore.

In its prospectus dated 19 July 2021, the company had informed about the definitive agreements signed with Grofers India (GIPL), Hands on Trades (HOTPL) and their parent entity Grofers International (together the "Grofer Entities") and others, in relation to acquisition of certain minority stake in GIPL and HOTPL, as well as certain rights in each of the Grofer Entities.

The food delivery aggregator has acquired 3,248 compulsorily convertible preference shares and 1 equity share, representing 9.16% stake on fully diluted basis, of Grofers India (GIPL) for a cash consideration of Rs 518.21 crore.

Grofers India operates an e-commerce marketplace in India, providing an information technology platform on a digital and electronic network to act as a facilitator between third-party sellers of various products (such as grocery, fruits and vegetables, bakery items, personal care, health and hygiene, pet care, and baby care etc.) and potential buyers of goods. It also provides support services to merchants in relation to sales made on the platform by the merchants, including, warehousing, logistics, order fulfilment, payment collection and other services and advertisement services for brands.

Concurrently, Zomato has also completed the acquisition of 4,48,361 compulsorily convertible preference shares and 1 equity share, representing 8.94% stake on fully diluted basis, of Hands on Trades (HOTPL) for a cash consideration of Rs 222.83 crore.

Hands on Trades is engaged m the business of B2B wholesale trading with third party merchants, contract manufacturing of grocery, food related products and other goods for the purpose of onward sale on a wholesale basis, and providing warehousing services including storage of grocery goods and food-related products to third party merchants.

Zomato had received the approval of the Competition Commission of India for its proposed investment in GIPL and HOTPL vide its letter dated 13 August 2021.

Separately, Zomato informed about the dissolution of its step-down subsidiary Zomato USA LLC.

Zomato is one of the leading Food Services technology platforms in India in terms of value of food sold, as of 31 March 2021.

Shares of Zomato debuted on the bourses on 23 July 2021. The scrip was listed at a price of Rs 115 apiece, at a premium of 51.32% to the issue price of Rs 76 per share.

The initial public offer (IPO) of online food delivery platform Zomato received bids for 2,751.27 crore shares as against 71.92 crore shares on offer, according to stock exchange data. The issue was subscribed 38.25 times.

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