Zomato, the food delivery giant, is planning to pay INR 2,048 crore to Paytm for its entertainment and ticketing business. Paytm, the troubled fintech major, wants to concentrate on its core financial service offerings, while Zomato wants to grow its market share in the “going-out” segment. The boards of Zomato and Paytm approved the cash transaction on August 21, and both companies notified the exchanges.
The parent company of the Paytm brand, One 97 Communications, has agreed to use a slump sale to transfer its movie, sports, and event ticketing business to its wholly-owned subsidiaries, Wasteland Entertainment Private Limited (WEPL) and Orbgen Technologies Private Limited (OTPL). Paytm will keep providing ticketing services for the duration of the transition, which could last up to 12 months. For the “going-out” section, users will be prompted to switch to Zomato’s upcoming app after being redirected. The transaction is a big step toward Zomato expanding its operations beyond food delivery, following its aggressive 2022 acquisition of Blinkit and subsequent investment in the popular quick commerce space.
Zomato announced earlier this month the release of the “District” app, which will unify its going-out business and include dining and movie and event ticketing. This is an ambitious expansion beyond Zomato’s core services of food delivery and hypercommerce. In the upcoming weeks, the app will be made accessible to the general public.
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In the intricate deal, OCL uses a slump sale to transfer its movie, sports, and event ticketing businesses to its affiliates WEPL and OTPL. After that, OCL will use preferential allotment to infuse cash into these subsidiaries, using the proceeds to pay the slump sale payout. Zomato will concurrently acquire OCL’s full ownership of OTPL and WEPL, thereby turning them into fully owned Zomato subsidiaries.
With this, Zomato enters a wide range of lifestyle services, including shopping, staycations, live performances, movies, sports ticketing, dining out, and more, all on one platform. Experts predict that the acquisition will enable Zomato to improve user discovery of entertainment options, find a way to cross-sell its food offerings and bolster the movie ticketing and events business through an integrated loyalty program.
Zomato will introduce a discoverability element to the movie ticketing and events industry, which is currently absent. Users usually visit a ticketing website for the first time after deciding which movie or comedy show to see. They buy a ticket and head out without taking the time to see what else is available.
Deepinder Goyal, CFO, Zomato said,Â
“On the people side, this acquisition is our first major acquisition where we are acquiring a team that we do not know very well (in Uber Eats acquisition we did not acquire any team and in Blinkit we knew the founder and team really well). We are betting on the team much more this time and hoping everything works out well. The main driver of success is going to be cultural integration of the new team that will join us – which means assimilation of the new team into our flattish culture.”
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