India’s fledgling morning milk delivery startups are quickly consolidating as online grocery major Bigbasket is in talks to acquire Unilever Ventures-backed Milkbasket even as the Alibaba-backed company is in advanced stages of closing the deal to acquire another player in the space, DailyNinja, said three people briefed on the matter.
Both are distress and majority stock acquisitions, according to four people briefed on the matter, expected to be done at a higher valuation for Bigbasket than its previous round which valued it at $1.2 billion last year.
“The talks are in an advanced stage with Milkbasket but its enterprise value would be significantly less than $15 million,” a person aware of the goings-on said. Milkbasket has also held discussions with other players like Swiggy, Amazon India and Dunzo as well and a deal has not been finalised yet.
Gurgaon-based Milkbasket, much like other players, largely sold milk delivery as its primary service and tried to sell non-milk items to consumers to widen its margins. Milkbasket has been clocking about 40,000-50,000 deliveries per day and is seeing a spike in order size in the past few days owing to the outbreak of Covid-19.
For context, BBDaily, essentials-focused delivery service from BigBasket, was clocking about 1.4 lakh orders daily in October. Largely focused on the Delhi-NCR market, Milkbasket also expanded to cities like Bengaluru and Hyderabad.
The DailyNinja acquisition is almost complete with select teams of the Sequoia and Matrix Partners India-backed startup already working out of BigBasket’s premises. Once formally closed, DailyNinja will come under BBDaily and its founders will be joining the team, a person aware of the matter said.
Milkbasket co-founder and CEO Anant Goel did not reply to an email sent by TOI while he declined to comment on the matter over the phone. Bigbasket co-founder and CEO Hari Menon declined to comment as well. Queries to Swiggy, Amazon India and Dunzo did not get a response at the time of filing this article.
Both deals are expected to strengthen the position of BigBasket in the grocery delivery space, which has seen competition from Walmart-owned Flipkart, Amazon, Softbank-backed Grofers and the recent entry of Reliance Industries. The transaction marks a broader consolidation in the segment, as other players like Bengaluru-basked Doodhwala shut its service in October last year while SuprDaily was acquired by Swiggy in 2018.
Milkbasket has been the most well funded standalone player in the space, with a total of $26 million raised from Blume Ventures, Kalaari Capital, Mayfield and Beenext besides Unilever Ventures.
Investors tracking the space said that the hypothesis of a standalone player in the space could not work out given the tightening funding environment and entry of large players like Swiggy, which TOI had reported last year is planning to invest $100 million in the segment. “Everyone was going after the same segment and it became tough to raise more money with bigger players, including Amazon, investing in the space. They (standalone firms) had no choice but to consolidate,” one of the people mentioned above said.
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