BigBasket restarts talks with smaller rival Grofers for merger
Grocery startups BigBasket and Grofers have revived talks for a merger as their investors Alibaba and SoftBank look to join hands, ahead of a potentially costly market share battle with Amazon and Walmart-owned Flipkart to dominate India’s online grocery market, three people familiar with the development said. The proposed deal involves BigBasket acquiring its smaller rival, the people said on condition of anonymity.
If the deal goes through, the merged entity could raise $250 million from China’s Alibaba Group Holding Ltd, one of the three people said. Japan’s SoftBank Group Corp. and other investors could pour more capital into that entity, the other two people said.
Grofers and Big Basket declined to comment. SoftBank and Alibaba did not respond to emailed queries. Bengaluru-based BigBasket may buy smaller rival Grofers under a proposed deal
The merged entity may raise $250 million from Alibaba Group
The talks are at an early stage and it is not clear who will run the merged entity if the deal goes through
The renewal of talks between the two online grocery start-ups comes ahead of a potentially costly market share war with Amazon and Flipkart
While Grofers raised $65 million in
March, it is said to be seeking fresh capital of $120-$150 million
A merger of BigBasket and Grofers makes sense for their investors, said analysts. The online grocery business is a top priority for Walmart and Amazon and they are expected to pump in hundreds of millions of dollars to expand their fledgling grocery operations. Rather than raising capital separately, BigBasket and Grofers would be better off as a merged entity, said the analysts. BigBasket and Grofers held similar talks in early 2017, when the Gurugram-based online grocery shopping site was struggling to raise fresh funds
NEW DELHI/BENGALURU:
Bengaluru-based Big Basket (run by Supermarket Grocery Supplies Pvt. Ltd) had in early 2017 held talks with Gurgaonbased Grofers India Pvt. Ltd for a potential buyout as the latter was struggling to raise funds.
Grofers, however, managed to turn around its business by the start of this year through cost cuts, reducing operations in some markets and removing unprofitable products.