Paytm to pick stake in BigBasket with $200 million investment; would Amazon lose acquisition deal?

Editor | Sep 10, 2020

Reports are rife that online marketplace Paytm Mall is looking to pick a majority stake in e-grocer Big Basket by investing $200 million. While both the ecommerce players have refused to comment on this development, insiders (three to be precise) have revealed that the talks are very much on.

As per the unidentified sources, the Alibaba-backed company has already started due diligence process to determine Big Basket’s value. After due diligence is completed, the final offer would be made. But Paytm is willing to invest $200 million.

A source disclosed,

(Even) before the due diligence, Paytm (Mall) has offered $200 million to own a majority stake in BigBasket… The final agreement will be made only after due diligence process gets over.”

Would Paytm snatch away Big Basket from Amazon?

While the Flipkart-Amazon war often hogs the limelight, the Paytm-Amazon war too is getting intense.

In June this year, Big Basket signed an exclusivity agreement with Amazon to discuss an acquisition deal. The online grocer is contract bound to not engage in any acquisition talks with some other firm. But Big Basket was free to talk to investors for raising funds. And Paytm is that investor which is ready to pour $200 million.

According to industry experts, Paytm is looking to gain more from the investment in order to outrun Amazon.

“The deal will help Paytm Mall strengthen its online-to-offline strategy (using BigBasket’s partnerships with corner stores), helping them take on Amazon,” said an insider.

The sources also revealed that picking up a major stake might be just the first step in acquiring Big Basket and scaling up its business

“BigBasket is the largest e-grocer, and was valued at $450 million in March 2016. This can, however, be a precursor to an acquisition,” a source disclosed.

BigBasket is in an enviable position

Both the online marketplaces, Amazon and Paytm have deep pockets (Amazon’s founder Jeff Bezos and Alibaba’s Jack Ma). Therefore, Big Basket is set to gain a lot, irrespective of who acquires it. The company is on a high after witnessing three-fold growth in sales. The e-grocer is also positive about reaching profitability by 2020.

A major acquisition deal would bring great news for the online grocery industry after struggling with low funds and wafer thin margins. Just like Flipkart funding did for other ecommerce players. Ecommerce leader Flipkart is also ready for its round 2 in the grocery sector.

Would Amazon lose out on the Big Basket acquisition deal? Or would it make an offer that Big Basket can’t refuse?


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