Will the Blinkit deal turn out to be too expensive for Zomato shareholders?

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Synopsis
In this all-stock deal, Zomato is valued at INR70.76 per share, down from the issue price of INR76. While some analysts question the economics of the transaction, others have shown apprehension about Zomato not committing a profitability timeline. Also, the company said the apps and brand names will remain separate, which casts doubts on its synergies claim.

The Zomato stock has failed to deliver for some time. While it managed to stage a smart recovery last month, the shares of the food-delivery app tanked 6.6% on Monday to INR65.85 over the previous close. So, what happened? On Friday (June 24), Zomato said it has agreed to acquire quick-commerce startup Blinkit for INR4,447 crore (about USD570 million) in an all-stock deal. The transaction value is 40% lower than Blinkit’s last valuation of just