Tata Digital files application at CCI to acquire 64.3% stake in BigBasket’s B2B arm

Tata Digital has filed an application at the Competition Commission of India to acquire up to 64.3% of the total share capital in BigBasket’s business to business entity Supermarket Grocery Supplies Private Ltd. 

According to the proposed acquisition application filed by Tata at CCI, the transaction would be a combination of primary and secondary shares of Supermarket Grocery Supplies (SGS). Importantly, SGS may acquire sole control over Innovative Retail Concepts Private Limited (IRC), which runs the B2C portal Bigbasket.com. 

The development comes soon after a media report suggested that Tata is all set to acquire around 68% stake in BigBasket for $1.3 billion. The deal is likely to give full exit to Chinese investor Alibaba which controls a 27.58% stake in the Bengaluru-based company.

While the application doesn’t give specifics such as the size and valuation of the deal, it emphasised that the proposed transaction will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined.

Tata Digital is a wholly-owned subsidiary of Tata Sons, which is the ultimate holding company of the entities belonging to the Tata Sons group. It is involved in the business of providing technology services related to identity & access management, loyalty program, offers and payments. 

The proposed transaction is notifiable under Section 5(a)(i)(A) and 5(b)(i)(A) of the Competition Act, 2002 and is currently under review at CCI.

With an application for the proposed transactions, Tata Digital is only a step away from acquiring BigBasket. The move will consolidate e-grocery space that has turned hyper-competitive after the entry of JioMart. The Reliance-owned platform emerged as a de facto leader in the space within a few months of its launch. 

Reliance is in late-stage talks to acquire subscription commerce app: Milkbasket for about $40 million. Akin to MilkBasket, BigBasket also runs BB daily that offers daily essentials and milk delivery.

According to Fintrackr, BigBasket’s B2B subsidiary (read as SGS) saw its revenue from operations surge by 37.6% to Rs 3,794.2 crore in FY20 from Rs 2,757.2 crore in FY19. The company is inching closer to break even as its total expenses grew by 31.3% to Rs 4,433 crore in FY20. It spent Rs 1.17 to earn a single rupee in the last fiscal year.