Discussions have taken place between E-commerce giant Flipkart backed by Walmart, over the possible acquisition of the on-demand hyperlocal delivery platform Dunzo.
According to sources familiar with the matter, talks are currently in progress. As the deal has not been finalised, both parties are still negotiating the terms.
Complex ownership structure of Dunzo
The acquisition deal is yet to be finalized with Flipkart, a prominent player in the Indian e-commerce sector and owned by Walmart, valued at over $32 billion, is evaluating the potential benefits of acquiring Dunzo, including the younger company’s business-to-business offerings based in Bengaluru.
However, The major point of contention are the complexities surrounding Dunzo's ownership structure. Dunzo had various intellectual property ties with Reliance Retail, India's largest retail chain. This had posed challenges in reaching an acquisition agreement, two sources familiar with the discussions revealed.
Reliance Industries' retail division, which acquired a 26% stake in Dunzo for $200 million in 2022, has yet to approve the deal.
Dunzo Denies
Dunzo has dismissed the report, describing it as "hearsay."
A spokesperson of Dunzo said, “We are on path to free cash flow break even in the month of March 24 and we have not had any conversation with any player for an acquisition of the business.”
About Dunzo
Established in 2014, Dunzo was among the pioneering startups to adopt this model. Supported by Google, Blume Ventures, and Lightbox, it sought to transform India's e-commerce landscape by promising customers delivery within 30 minutes.
These Acquisition discussions come after a challenging year for Dunzo, marked by difficulties to raise cash flow and staff payroll in 2023. Facing financial challenges, Dunzo has recently announced restructuring efforts, salary deferments, and layoffs.
Despite having secured around $500 million in funding so far, Dunzo has faced a significant decline in market share within the hyperlocal delivery sector, facing competition from emerging rivals like Zepto, Swiggy, and Zomato's BlinkIt.
Over the last three years, Dunzo has allegedly engaged in acquisition discussions with numerous companies, including Tata and Zomato, according to over a dozen individuals familiar with the matter.
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