The food delivery segment giant, Zomato and the fintech segment, Paytm have both stated that they are in talks over a deal of acquisition. The Transaction entails Zomato getting into a deal with Paytm where it acquires Paytm’s business in selling movie tickets and events. However, both companies made their specific statements that no final deal has yet been signed.
Details of the Potential Deal
The company set for the proposed takeover is expected to be worth between Rs 1600 crore and Rs 2000 crore. This would make it one of Zomato’s biggest acquisitions ever; the firm bought Blinkit, an instant commerce company, for $569 million in 2022.
Zomato disclosed in a regulatory filing, “"We acknowledge that we are in discussions with Paytm for the transaction, however, no binding decision has been taken at this stage that would warrant a Board approval and subsequent disclosure in accordance with applicable law,”
Similarly, Paytm confirmed the ongoing discussions but stressed that these are preliminary. “The company routinely explores various strategic opportunities aimed at enhancing shareholder value. The potential transfer of Paytm’s entertainment business is one such opportunity under consideration,” Paytm noted in its corporate filing.
Strategic Moves and Company Focus
This prospective deal is in sync with Zomato’s approach of increasing its bouquet in the category of ‘going-out’, which encompasses eating out, events and entertainment. The consumer market is still vast for Zomato and to gain more control, they plan on going further by adding food, grocery, and entertainment services.
“We are looking to strengthen our going-out business, which is part of our focus on our four key business areas,” Zomato added. This acquisition would help Zomato diversify and enhance its service offerings beyond food delivery, aligning with its long-term growth plans.
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On the other hand Paytm is now planning to dedicate its attention towards the basic aspects of Paytm which include payments and financial services. According to the company, its main focus is to assist the merchants in expanding their businesses through the digital goods commerce.
“Our main focus will be on payment and financial services, along with digital goods commerce, to support our merchants’ growth,” Paytm explained.
Such selective outsourcing would help Paytm to optimize its performance and focus on fields that are promising and profitable according to the company’s executives. To fully achieve these goals, it is currently focusing its efforts to re-establish its market position by capitalizing on its payment division and offering financial services.
Conclusion
It must be noted that there has been movement in the works between Zomato and Paytm’s movie ticketing and event arranging unit but the two have not reached an acquisition agreement yet.
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For Zomato, this shift could in fact help the aggregation site in its going out services category while for Paytm, it will be the opportunity to focus on its core competencies. The motivation of both companies is aimed at increasing its market positions and being able to offer optimum value to shareholders.
Zomato in Talks to Buy Paytm’s Movie Ticketing Business, but no binding deal yet