Amazon in talks to acquire Swiggy’s Instamart

Amazon has entered talks with Swiggy over a potential deal to acquire its fast-paced retail subsidiary Instamart. The development comes after Swiggy filed a draft prospectus (DRHP) for its Rs 10,414 crore ($1.25 billion) initial public offering (IPO).

The IPO is believed to be the largest deal ever for a new internet company, according to the Economic Times.

No official offer has been made yet, ET reported, citing sources, but it said Amazon needs to move quickly if it wants the talks to move to the next stage.

There is a chance that early discussions will not materialize due to the complicated nature of the deal in its current form. “Swiggy is unlikely to sell just its quick commerce business, and Amazon is not likely to be interested in the food delivery space, where growth is starting to stabilize,” the report said.

Buying the entire company would be prohibitively expensive for Amazon, given its valuation of $10 billion to $12 billion, as the company is not known for acquiring minority stakes.

Seattle-based e-commerce site gaint has been working on its fast-trading initiative for several months. However, the platform would need global approval because it does not offer fast shipping in its markets worldwide.

Flipkart had considered a similar deal with Swiggy, but it fell through due to valuation mismatches.

In recent times, many older e-commerce platforms like Amazon and Flipkart have been increasing their quick trade advantage.

With the sector seeing tremendous growth in the last few years, e-commerce platforms like Swiggy’s Instamart, Zomato’s Blinkit and Zepto are seen as competitors looking to expand beyond grocery retail.

India’s e-commerce market grew by 18-20 per cent in the first half of this year, with grocery sales growing by over 38 per cent, mainly due to a significant increase in quick trade transactions, reports said.

Nearly 40% of online grocery sales from 2021 to 2023 came from short-term trading, up 230%, led by the three largest companies.

Goldman Sachs recently valued Blinkit, the instant shopping unit of Zomato, at $13 billion.

Global brokers estimate that the value of the express trading market will reach USD 6 billion by 2025, whereas about three years ago it was negligible.