Zomato buys entertainment ticketing company Paytm for $244 million

Indian food delivery giant Zomato has acquired the entertainment ticketing business of financial firm Paytm for $244.1 million, a strategic move to expand its takeaway offering.

The acquisition, one of the largest M&A deals among new-age Indian technology companies, includes Paytm’s ticketing services for movies, sports and events. As part of the deal, Paytm’s flagship app will continue to host these offerings for up to 12 months, and 280 of its employees will join Zomato, the companies said.

Like food delivery, the new business operates as a duopoly: Reliance-backed BookMyShow controls three-quarters of the online movie ticketing market and more than half of the online event ticketing market, with the rest held by Paytm, according to Jefferies data.

The acquisition comes amid an impressive performance by Zomato’s stock market value, which has surged by more than 100% this year as the food delivery giant continues to expand in the Indian market.

Brokerage firm UBS said this week it valued Blinkit, Zomato’s fast-trading service, at $15.4 billion, giving it a higher value than the Noida-based company’s core food delivery business.

Zomato, which had a market capitalization of $27.3 billion as of the end of Wednesday, has about $1.5 billion in cash on its balance sheet.

Bank of America analysts said the acquisition is in line with Zomato’s broader strategy to diversify its services. The move could significantly boost Zomato’s ambitions to become a one-stop-shop for dining and entertainment, they said in a note.

“The proposed acquisition helps us scale and offer new use cases (such as movie and sports tickets) to our customers in this segment,” Zomato founder and CEO Deepinder Goyal said in a statement. “It makes us more relevant to our customers, which also gives us the opportunity to spin off the business into a new app (we will call it District) that could be a game-changer for each of these use cases, given the need for a single brand as a destination in this segment.”

Meanwhile, Paytm is refocusing its efforts on its core fintech operations amid heightened regulatory scrutiny. The company’s ticketing business, which was built on the back of its acquisitions of Insider.in and TicketNew, contributed about 9% to Paytm’s total revenue in the last quarter and 4% to its FY24 net revenue. Paytm acquired Insider.in and TicketNew for a value of about $32 million.

“Paytm’s move to sell its entertainment ticketing business underscores the company’s core focus on payments and financial services distribution,” Paytm said in a stock exchange filing.