In an exchange filing, Zomato acknowledged, “We are in discussions with Paytm for the aforementioned transaction, but no binding decision has been taken at this stage that would warrant a board approval and subsequent disclosure in accordance with applicable law.”Zomato added, “This discussion is intended to further strengthen our ‘Going-out’ business and aligns with our focus on our four key businesses currently.”
ET reported on June 16 that Zomato is looking to acquire Paytm’s movie booking and events unit, in a deal that may value Paytm’s vertical at around Rs 1,600-1,750 crore. Post the addition of receivables from cinema exhibitors, the valuation could go up to Rs 2,000 crore, according to sources.
Paytm also confirmed discussions regarding the potential transfer of its entertainment business in an exchange filing, stating that all the discussions are preliminary and non-binding at this stage.
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If the transaction goes through, it will be among the largest buyouts for Zomato after it acquired Uber Eats in 2020 and took over quick commerce platform Blinkit (formerly Grofers) in 2021 in an all-stock deal valued at Rs 4,447 crore.Commenting on the development, JM Financial BFSI analyst Sameer Bhise said, “Media reports speculate a deal value of Rs 1,500-2,000 crore. While Paytm in its quarterly filings does not disclose revenue or profitability of its events and movie verticals, we estimate total revenue of Rs 275–300 crore for the verticals in FY24. This implies a likely valuation of 5x-7x FY24 sales. Note that the deal would potentially add only around 2.5% to Zomato’s FY24 consolidated revenue. The impact on profitability is difficult to ascertain at the moment as annual subsidiary-level disclosures come with a lag. Zomato’s balance sheet remains healthy to facilitate the deal with a net cash balance of Rs 12,200 crore as of March 2024.”At 10:50 am, Paytm shares were trading 0.7% higher at Rs 427.7 on BSE.(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)