Zomato in Talks to Acquire Paytm’s Entertainment Vertical
- ByStartupStory | June 17, 2024
Food delivery giant Zomato is in discussions with fintech company Paytm to acquire its movies and ticketing business, according to a regulatory filing by Zomato. This potential acquisition is part of Zomato’s strategy to bolster its “going-out” business and aligns with its focus on its four key areas of operation.
“The above discussion is being undertaken with an intent to further strengthen our going-out business and is in line with our stated position of focusing only on our four key businesses currently,” Zomato said in the filing.
Zomato emphasized that this disclosure was made voluntarily in response to news articles on the subject. “We acknowledge that we are in discussions with Paytm for the aforementioned transaction, however, no binding decision has been taken at this stage that would warrant a board approval and subsequent disclosure in accordance with applicable law,” the company added.
Meanwhile, One97 Communications, Paytm’s parent company, confirmed the talks but clarified the preliminary nature of the discussions. “The company routinely explores various strategic opportunities aimed at enhancing shareholder value. The potential transfer of Paytm’s entertainment business, a component of our marketing services, is one opportunity under consideration,” One97 Communications said in a statement. They further added, “Discussions currently underway are preliminary and do not involve any binding agreements.”
The Economic Times reported that if the deal is completed, it would value Paytm’s movie and ticketing vertical at Rs 1,500 crore. This acquisition would be Zomato’s second-largest, following its purchase of Blinkit for nearly half a billion dollars in 2022.
The potential deal comes at a challenging time for Paytm. Last month, the company, led by Vijay Shekhar Sharma, reported its first-ever sales decline. For the January-March quarter, Paytm’s losses surged over three-fold year-on-year to Rs 550 crore, and Q4 revenues dropped 2.8% YoY to Rs 2,267 crore. The company faced significant regulatory sanctions from the Reserve Bank of India, forcing it to halt operations at its subsidiary Paytm Payments Bank Ltd, resulting in impairment losses of Rs 227 crore. In response, Paytm announced plans to trim non-core assets and cut jobs to manage the fallout from the regulatory actions on its payments bank.
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