In a significant move, Zomato, the food delivery company has announced the acquisition of PayTM’s ticketing business for ₹2,048 crore.
This deal, valued at ₹2,048 crores on a cash-free, debt-free basis was approved by Zomato and Paytm’s boards on August 21, the two companies informed the exchanges.
Under the deal, Zomato will fully acquire Orbgen Technologies Pvt Ltd (OTPL), which is into movie ticketing, for ₹1,264.6 crore and buy Wasteland Entertainment Pvt Ltd, which is into events ticketing for ₹783.8 crore.
As part of this agreement, One 97 Communications Limited (OCL), which owns the brand Paytm, will transfer its entertainment ticketing business to Zomato by:
- Transfer of OCL’s entertainment ticketing business to its 100% subsidiaries, Orbgen Technologies Pvt Limited (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL), and
- Selling a 100% stake in its subsidiaries OTPL and WEPL, which operate the TicketNew and Insider platforms, respectively to Zomato. The transfer will also include ~280 existing employees from the entertainment ticketing business.
Paytm’s move to sell its entertainment ticketing business to focus on core payments and financial services distribution. In recent quarters, the company has also expanded its offerings in insurance, equity broking, and wealth distribution.
The transaction also includes a transition services agreement where the ticketing business will continue to run on the Paytm app, as well as on the TicketNew and Insider platforms, for a period of up to 12 months to ensure a smooth transition of the business from Paytm to Zomato.
Key Highlights of the Deal:
- Transaction Value: Rs 2,048 crore on a cash-free, debt-free basis.
- Transfer of Business: Paytm will transfer its entertainment ticketing business to Zomato through its subsidiaries.
- Employee Transfer: 280 employees from the entertainment ticketing business will also be transferred to Zomato.
- Transition Period: Movie and event tickets will continue to be available on the Paytm app for up to 12 months.
Paytm spokesperson said, “We built the entertainment ticketing business by addressing the market needs of the time. Today, as it transitions to Zomato ownership, we thank every team member who contributed to building this business. It has been a privilege to grow this business with an incredible team. This move allows us to continue focusing on long-term growth in our core areas and value creation for all stakeholders.”
Paytm built movie ticketing from the ground up and acquired TicketNew and Insider for a total consideration of ₹268 crores from 2017 to 2018. Further, additional investments were also made to scale up the business. The company built the entertainment ticketing business to revenues of ₹297 crores and Adjusted EBITDA of ₹29 crores in FY24.
Deepinder Goyal, Chief Executive Officer, Zomato, said, “This is not really an absolutely new business for us as we have already been doing ticketing as a business for more than a year now and have been eyeing building more use cases for that business. Just to recap, our going-out business (which includes dining-out and event ticketing) did ₹3,225 crore of GOV (gross order value) in FY24 growing at 136% YoY.”
“District – our dedicated going-out app – has the potential to drive strong customer engagement and incremental demand across booking movie tickets, IPL tickets, dining-out table reservations, discovering live entertainment and booking weekend getaways. Some of these are strong customer pull use cases (like a blockbuster movie ticket booking) while others could be more discovery-based transactions (like a pop-up by a star chef at a local restaurant). We want to position ‘District’ as the brand that consumers turn to when they are thinking of going out,” he added.
“In line with this thinking and our belief around building ‘super brands’ (Zomato, Blinkit) as opposed to ‘super apps’, we think that a new brand will help customers build association with going-out use cases and also allow us to build a loyalty program which drives higher retention. It also makes it much easier for us to keep adding new use cases for our customers given more real estate in a new app vs trying to fit it in a tab on the Zomato app. This also helps us keep the Zomato brand even more closely associated with food delivery only,” he said.
Deloitte Touche Tohmatsu India LLP provided transaction advisory and valuation, while Morgan Stanley assisted Paytm with a fair opinion on the transaction. Luthra & Luthra acted as legal counsel to Paytm on the transaction. The transaction is expected to close within this quarter, subject to the satisfactory completion of all closing conditions
