Online milk delivery startup Milkbasket is in talks with Amazon India for a potential acquisition, according to two people familiar with the matter. This comes as the Gurugram-based firm’s acquisition talks with BigBasket did not go through due to differences in valuation, added the two people cited above.
If the deal with Amazon India materializes, it will be most likely be an all-stock deal.
“Milkbasket has been in the market for six months to raise money or get acquired,” said one of the persons cited above, requesting anonymity. “Even though they recently saw a spike in their order numbers, it is unclear in which direction this will go.”
Milkbasket has held conversations with Amazon India in the past as well but it fizzled out without any outcome. This time, however, the talks are aligned with a spike in interest by Indians to purchase groceries online. To be sure, the talks aren’t in an advanced stage and may not materialize into a deal.
“This time Amazon sees more value in the company because of the Covid-19 crisis. The spread of the virus has triggered a demand for grocery and essentials with an emphasis on no-contact delivery,” said the second source, requesting anonymity.
Milkbasket declined to comment for this story. An Amazon India spokesperson said, “We do not comment on what we may or may not do.”
This also comes just days after reports surfaced on Amazon shutting down its 2-hour instant grocery delivery service Amazon Prime Now. It is expected to be replaced with Amazon Fresh.
Besides Amazon, Milkbasket has also been in some early conversations with a few brick and mortar retailers for possible synergies. However, according to sources, these talks are at a fairly early stage.
If the deal with Amazon goes through, it will mark further consolidation in the milk delivery startup space. While 2018 saw the rise of milk delivery startups such as Milkbasket, Daily Ninja and a few others that raised funding, the last six months have seen some consolidation in this space.
Daily Ninja, backed by Saama and Sequoia, among others, was recently acquired by BigBasket. Another player in this space, Doodhwala, handed over its operations to rival Freshtohome in October.
“For now, there are no talks between BigBasket and Milkbasket. BigBasket was offering a deal similar to the one they gave to Daily Ninja while Milkbasket was looking for a much better valuation,” added one of the sources mentioned above. According to a TechCircle report, DailyNinja’s lead backers: Sequoia Capital, Matrix and Saama Capital got stakes worth $5.6 million in BigBasket.
Around a month ago, Milkbasket raised a bridge round of over Rs 20-25 crore with an aim to break even. They were working towards improving efficiency with a target to break even by July-August, sources say. For this purpose, the company had also downsized operations across Bengaluru and NCR. Entrackr exclusively reported this in November.
Times of India first reported that Milkbasket has been in acquisition talks with BigBasket, Swiggy, Amazon India and a few others.