Food ordering platform Swiggy and its rival Zomato assessed a potential merger signaling the frantic confabs between the two in times to come. In the meeting held last week, both the companies discussed on the merger, however, the discussions went for a toss due to differences in the business alignment and expected valuations.
Earlier, the Founder and CEO of Zomato, Deepinder Goyal Reassured Staff After Valuation Controversy that reported claims of low market share
The proposals from both the giants may or may not end in a deal as both the companies have different terms. On one hand, Zomato proposed a stock-based merger, while Swiggy wishes to acquire the food delivery business of Zomato.
As stated by a reliable source, “Zomato could have continued with the search and restaurant discovery business while continuing as a shareholder in Swiggy whereas Zomato is keen in an outright merger. Zomato also proposed a 4:1 share swap ratio to the food ordering and delivery platform, Swiggy”.
A source added, “Swiggy was more interested in exploring the merger at existing valuation, but Zomato's proposed swap ratio would have valued it at $225 million.” In the year 2015, Zomato was valued at more than $960 million and Swiggy stood at $400 million. Currently, Zomato is closing a $200-million round of investment from Ant Financial, an Alibaba affiliate, which is independent of these discussions.
An official of Swiggy, remarks “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.”