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Zomato rejects EY’s new valuation that lowers its share price for Blinkit deal

The company did not disclose the share price suggested by EY in the new report.

The company had on July 26 announced preferential issue of 62.85 crore shares, being the discharge of total purchase consideration of Rs 4,447 crore for the acquisition of up to 33,018 shares of Blink Commerce Private.
The company had on July 26 announced preferential issue of 62.85 crore shares, being the discharge of total purchase consideration of Rs 4,447 crore for the acquisition of up to 33,018 shares of Blink Commerce Private.

Food tech platform Zomato said on Friday that the company has decided to go with the original valuation report of EY on Blinkit, which stands in absolute and complete compliance with all provisions of applicable laws, even as EY had come up with another report on the same that suggested a reduced share price for acquiring quick commerce firm Blinkit.

“The original report is in absolute and complete compliance with all provisions of applicable laws, including Clause 12 (1) (c) of the Articles of Association (AoA) of the Company, the Companies Act, 2013, relevant rules made thereunder and SEBI (ICDR) Regulations, 2018,” Zomato said in a filing to the stock exchanges.

The company had on July 26 announced preferential issue of 62.85 crore shares, being the discharge of total purchase consideration of Rs 4,447 crore for the acquisition of up to 33,018 shares of Blink Commerce Private.

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In a filing to BSE, the company said it obtained a fresh report dated July 20 from EY using different valuation methodologies of net asset value and comparable trading multiples.

The new report, it said, was not an addendum to the original report and had no bearing or relevance on the issue price of the shares. This is because the issue price per share, arrived at as per SEBI ICDR (as per the original report), was higher than the value(s) per share as per the new report.

Zomato said the new EY report was placed before the board on August 4 and after evaluating the price of the equity shares from the original report and new report, the board has concluded that the fair market value per equity share of the company would remain unchanged at Rs 70.76 per share, which is the issue price, as per the original report that was disclosed to the shareholders in the notice.

The company did not disclose the share price suggested by EY in the new report.

Last week, Zomato had clarified on the Blinkit M&A deal, saying that 97% shareholder votes were in favour of the transaction and its financials getting consolidated into Zomato’s consolidated financials post the closing. On the concerns over paying higher valuation for Blinkit and related party transactions, Deepinder Goyal said that all applicable laws were followed and external agencies validated the transaction.

The e-voting on the preferential issue closed on July 25 and voting results along with the scrutiniser report were submitted with the exchanges on July 26 in which 97.19% of the shareholders voted in favour of the proposed issuance.

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