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Zomato chalks out grand merger & acquisition plan

November 15, 2021

Zomato chalks out grand merger & acquisition plan

Foodtech giant Zomato has unveiled an ambitious plan to infuse $1 billion in fresh capital into start-ups that will help it build adjacent businesses in sectors including hyperlocal commerce, logistics, point-of-sale services and electric vehicle fleets.

The strategy reflects business models of Chinese internet holding firms such as Meituan, Alibaba and Tencent, which focus on acquiring and operating several companies, resulting in greater customer retention and large transaction revenue.

China-based Meituan which offers a multi-suite of products across categories like travel, shopping, ticket bookings, food delivery, and various other online customer products is currently valued at $220 billion after starting-up in 2011. It has an average transaction rate of 28.1 per user on a yearly basis. This is possible due to its large base of strategic investments in 46 companies, including 4 multi-billion-dollar acquisitions.

Though the model has been largely successful in China where e-commerce penetration is at around 80%, Zomato still has to prove that the same model can make economic sense in India where e-commerce penetration is still looming at 4-5% of the total retail economy.

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