The controversy around the deal has been on the pricing of the transaction and Goyal’s conflict of interest arising from his close ties with Blinkit’s founder Albinder Dhindsa, a former Zomato employee, whose spouse is a cofounder at the food-delivery firm.
Zomato acquired Blinkit for Rs 4,447 crore in an all-stock deal, and the transaction was approved by voting shareholders subsequently. Some said the transaction overvalued Blinkit and undermined the interests of Zomato’s shareholders as Blinkit is a loss making company in a segment that is yet to prove it can become profitable.
“We objectively evaluated all available acquisition opportunities in the quick commerce space and after zeroing in on Blinkit, we ensured that rigorous and detailed due diligence, deliberations and negotiations were done before agreeing to the terms of the transaction (like any other company would do for a large and important transaction),” Goyal wrote in the shareholders’ letter filed with BSE on Monday.
“We had multiple external advisors who helped us with various aspects of the transaction, including valuation which was done by EY, and we took an independent fairness opinion from Morgan Stanley. We negotiated hard on valuation but at the same time, had no intention to be opportunistic since it is important to be fair to the team on the other side who is going to build this business going forward,” he added.
Following the transaction, Zomato was criticised for not disclosing the close relationship between its founding team and Blinkit.
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“The relationship between Albinder and Akriti/ I is public and already known – there was nothing to hide there. The board was aware of it and all parties, including Akriti herself, made sure that she was never involved in any discussions or decisions with respect to the transaction. This transaction also had no overlap with her role as Chief People Officer at Zomato,” Goyal wrote.
He added that the company took an independent opinion from Saraf & Partners on there being no related party transaction under applicable law.
“Me knowing the founder of the company we are acquiring is actually a good thing to my mind, as it significantly increases the chances of deal success and reduces the blind spots which could lead to value destruction post consummation of the transaction. This is especially true for internet businesses where a large part of the value in the business is people and intellectual capital. I would never take this large a bet on people whose motivations I do not know. And I think money is a terrible motivator,” Goyal
said.
