Zomato in talks with Swiggy for a merger: Report

Moneycontrol News 

Zomato and Swiggy are currently in talks for a potential stock-based merger. The merger talks were held last week, but the deal is unlikely to proceed as the two companies have varied business inclinations and are in disagreement with the terms of the merger, reports the Economic Times. 

While Zomato has proposed a stock-based merger, Swiggy is keen to acquire and operate the food delivery system of Zomato. Sources revealed that Zomato was more interested in an outright merger with a 4:1 share swap ratio instead of being a shareholder in Swiggy.

Also, Swiggy wanted the merger to be at the existing valuation, but at 4:1 ratio the startup would be valued at USD 225 million, a source told Economic Times. Swiggy is currently valued at USD 400 million after it raised USD 80 million from South African media giant Naspers in May.

On the other hand, Gurgaon-based Zomato is currently valued a little above USD 960 million and is in talks to raise capital up to USD 200 million from Chinese e-commerce giant Alibaba's payment affiliate Ant Financial, which could elevate the company's valuation to USD 1 billion.

Zomato dominates the restaurant discovery business, but faces competition from Swiggy — a food ordering and delivery platform. Although Swiggy completes about 4-4.5 million orders per month, Zomato has a higher average transaction value with 3-3.2 million orders a month.

In an e-mail statement to Moneycontrol said, “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.”