InvestorQ : Why did the stock of Zomato fall so sharply on Monday?
sara Kunju made post

Why did the stock of Zomato fall so sharply on Monday?

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Mary Joseph answered.
2 months ago
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On Monday, the stock of Zomato cracked by 7.53% to a price level of Rs65 per share. This fall came after Zomato announced over the weekend that it will acquire Blink Commerce Pvt Ltd for Rs4,447.48 crore via a share swap deal. The idea was to make a big footprint on the quick commerce business. However, markets were unhappy about the size of the consideration for Blinkit as well as the fact that the stock would eventually result in equity dilution of Zomato to the extent of 7% of equity. That is being factored into the price.

Under the terms of the deal, it may be recollected, that Zomato would purchase up to 33,018 equity shares of Blink Commerce from its shareholders at a price of Rs13.45 lakh per equity share. Most of the large shareholders of Blinkit including Sequoia and Softbank will now become shareholders of Zomato. The dilution of equity of Zomato is due to the 62.85 crore fully paid-up equity shares of Zomato will be issuing to the shareholders of Blinkit as a consideration for the purchase. It will be in the form of a preferential placement.

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