In the ever-evolving landscape of Indian startups, mergers and acquisitions (M&A) have become instrumental in helping companies grow, expand into new markets, and create synergies. One of the most notable recent examples is the merger of Zomato and Blinkit (formerly Grofers) — a deal that reshaped the quick-commerce and food delivery space in India.

While the headlines focus on the financial aspects, a significant, often overlooked factor in the success of this merger is the role of corporate lawyers. These legal professionals were pivotal in navigating the complexities of the deal, from legal compliance to negotiations and documentation. In this blog, we’ll explore the vital contributions of corporate lawyers in the Zomato-Blinkit merger, the challenges they encountered, and the overall impact of this significant deal.

Understanding the Zomato-Blinkit Merger

Zomato, one of India's largest food delivery platforms, acquired Blinkit (formerly Grofers), an instant grocery delivery startup, in an all-stock deal valued at ₹4,447 crores (around USD 569 million). This merger was aimed at strengthening Zomato’s presence in the quick-commerce space, enabling it to compete more effectively with other players like Swiggy’s Instamart and BigBasket.

While it appeared seamless on the surface, executing a deal of this scale involved months of preparation, multiple stakeholders, and, most importantly, a team of corporate lawyers who ensured everything was done within the bounds of law.

The Role of Corporate Lawyers in Mergers and Acquisitions

Corporate lawyers are the backbone of any successful M&A transaction. They ensure that the deal is legally sound, risks are minimized, and all regulatory requirements are met. Here’s a breakdown of the critical tasks they performed in the Zomato-Blinkit merger:

1. Legal Due Diligence

One of the primary responsibilities of corporate lawyers in M&A is conducting due diligence. Before Zomato could acquire Blinkit, its legal team had to thoroughly review Blinkit's financials, intellectual property, contractual obligations, and any ongoing or potential litigation.

• Purpose: To ensure Blinkit’s assets, operations, and liabilities were fully transparent to Zomato, minimizing any post-acquisition surprises.

• Outcome: Zomato was able to make an informed decision about the deal, understanding the risks and opportunities that Blinkit brought to the table.

2. Structuring the Deal

The structure of the Zomato-Blinkit merger was particularly interesting because it was an all-stock deal. This means that instead of cash, Blinkit shareholders received shares in Zomato.

• Role of Lawyers: Corporate lawyers ensured that this structure was fair to both parties, drafting agreements that reflected the valuation, share distribution, and potential future earnings. They also managed the complex legalities around shareholding patterns, capital markets, and investor agreements.

3. Navigating Regulatory Approvals

In India, mergers of this magnitude often require approvals from regulatory bodies like the Competition Commission of India (CCI) to ensure the transaction doesn't violate antitrust laws or lead to monopolistic practices.

• Legal Challenge: Corporate lawyers had to assess whether the Zomato-Blinkit deal would face any regulatory hurdles. They prepared documents and arguments to satisfy the CCI that the merger would not harm competition in the food delivery and quick-commerce sectors.

• Outcome: Regulatory approvals were obtained, clearing the way for the deal to be finalized.

4. Negotiations and Contract Drafting

M&A transactions involve intricate negotiations between the acquiring company and the target. Corporate lawyers play a crucial role in these discussions, ensuring that their client’s interests are protected.

• For Zomato: Lawyers negotiated terms related to share distribution, management control, and how Blinkit’s operations would be integrated into Zomato’s platform. They also handled the legal aspects of Blinkit’s workforce transition to Zomato.

• Drafting Contracts: Once the negotiations concluded, lawyers drafted the final merger agreement, ensuring that all parties were legally bound to fulfill their obligations.

Challenges Faced by Corporate Lawyers in the Zomato-Blinkit Merger

While the outcome was a successful deal, the journey wasn’t without challenges. Corporate lawyers faced several obstacles during the Zomato-Blinkit merger:

1. Valuation Discrepancies

Arriving at a fair valuation for Blinkit was no easy task. Blinkit had undergone multiple rebranding efforts and was operating in a fiercely competitive market. Zomato’s legal team had to ensure that the valuation was in line with Blinkit’s financial health and future growth potential.

2. Handling Stakeholder Interests

In an all-stock deal, shareholders of both companies have a vested interest in the outcome. Lawyers had to ensure that the interests of Blinkit’s shareholders, Zomato’s shareholders, and existing investors were all aligned, which involved a delicate balancing act during negotiations.

3. Regulatory Scrutiny

The Competition Commission of India is known for its rigorous review process, particularly for deals involving market leaders. Lawyers had to meticulously prepare to address any concerns the CCI might raise, especially since this deal involved two major players in the food and grocery delivery sectors.

Impact of the Zomato-Blinkit Merger on the Industry

The merger has had a profound impact on India’s quick-commerce and food delivery sectors. By integrating Blinkit into its platform, Zomato has been able to offer a wider range of services to its customers, creating a one-stop-shop for both food and grocery delivery. This move positions Zomato to compete more effectively with Swiggy, which already has a foothold in the grocery delivery space with Instamart.

For lawyers, this deal demonstrates the growing importance of M&A in India's tech and startup ecosystem. As more companies look to consolidate and expand their services, the demand for skilled M&A lawyers will continue to rise.

How You Can Build a Career in M&A Law

If you’re inspired by the work corporate lawyers did in the Zomato-Blinkit merger and want to become part of this exciting field, The Legal School offers the perfect opportunity. Our Certification in Mergers and Acquisitions, Private Equity, and Venture Capital Laws is designed to equip you with the knowledge and skills you need to succeed in M&A law.

With expert faculty and practical case studies, you’ll learn about:

• Due diligence processes

• Regulatory requirements for mergers

• Negotiation tactics and contract drafting

• Real-world examples of M&A transactions

Take your first step towards a rewarding career in corporate law and become the legal mind behind India’s next big deal!

Conclusion

The Zomato-Blinkit merger is a testament to the crucial role that corporate lawyers play in ensuring the success of high-value deals. From due diligence to regulatory approvals, their expertise shaped the outcome of this landmark acquisition. As the demand for M&A lawyers continues to grow, now is the perfect time to build your expertise in this field with The Legal School’s M&A certification.