Food delivery company Zomato, which recently went public, has received approval from the competition commission of India or CCI to acquire a 9.3% stake in SoftBank-backed online grocery firm Grofers.
“Commission approves proposed acquisition by Zomato of approximately 9.3% stake in Grofers India and Hands on Trades,” said CCI in a tweet.
Last month, Zomato and Grofers had sought approval from the competition watchdog to acquire a minority stake in the Gurugram-based company. During the submission, they mentioned that the proposed transaction will have no impact on the competitive landscape in any potential relevant market in India, in any manner.
While the details of the transaction are yet to be finalized, media reports suggest that Grofers had signed a deal with Zomato and Tiger Global to raise $120 million.
If the deal goes through, Grofers is likely to join the coveted club of unicorns as it will be valued at over $1 billion. According to sources aware of the deal, Zomato is looking to eventually acquire the Albinder Dhindsa-led company in the long haul.
It’s worth noting that Zomato wants to re-enter the e-grocery business via Grofers. Last year, the Deepinder Goyal-led firm had shut operations of its grocery vertical Zomato Market within months of its launch.
The deal will also help Zomato counter market leaders in the e-grocery space where Tata-owned BigBasket and Reliance’s JioMart have acquired a majority market share. Besides the two, Zomato also faces stiff competition from Swiggy, Dunzo, Amazon and Flipkart — all of which offer online groceries.
Of late, Swiggy has been ramping up Instamart to deliver groceries and other essentials instantly. Grofers, on the other hand, also started fresh farm produce delivery within two hours. The e-grocery segment is witnessing the return of the express delivery concept after a gap of few years. BigBasket is also set to resume its option of deliveries within two hours.