Online food delivery platform Zomato is set to acquire the entertainment ticketing business of One97 Communications, the owner of Paytm, for Rs 2,048 crore. The deal will help the troubled fintech company Paytm focus on its core activity of payments and financial services distribution. Paytm’s entertainment ticketing business covers movies, sports, and events (live performances).
Why Has Paytm Decided to Sell Its Entertainment Business to Zomato?
Paytm said it allows the fintech to strengthen its focus on core payments and financial services distribution.
“Paytm’s move to sell its entertainment ticketing business underscores its core focus on payments and financial services distribution. In recent quarters, the company has also expanded its offerings in insurance, equity broking, and wealth distribution, with significant opportunity to cross-sell these services and grow its market presence as a leading financial services distribution player,” One97 Communications Ltd (OCL) said in a statement on August 21 while announcing the Paytm-Zomato deal.
This move allows us to continue focusing on long-term growth in our core areas and value creation for all stakeholders, a Paytm spokesperson said.
What’s Inside the Zomato-Paytm Deal?
It is a cash-free, debt-free deal valued at Rs 2,048 crore. As part of this agreement, OCL’s entertainment ticketing business will transfer business to its 100 per cent subsidiaries Orbgen Technologies Pvt Ltd (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL), followed by the sale of 100 per cent stake in these subsidiaries (which operate the TicketNew and Insider platforms) to Zomato.
Subsequently, Zomato will spin off the new business into a new app called ‘District’.
Under the deal, Zomato will fully acquire Orbgen Technologies Pvt Ltd (OTPL), which is into movie ticketing, for Rs 1,264.6 crore and buy Wasteland Entertainment Pvt Ltd, which is into events ticketing for Rs 783.8 crore.
Zomato-Paytm Deal: How Will It Help the Companies?
Though the deal will help Paytm focus on its financial services business, it will raise Zomato’s revenue by adding a new segment.
Blinkit’s acquisition by Zomato helped the online food delivery platform massively as its net profit skyrocketed to Rs 293 crore in the June 2024 quarter, compared with just Rs 2 crore a year ago.
Paytm’s combined entertainment ticketing business has a scale of Rs 297 crore in revenue and Rs 29 crore in adjusted EBITDA in FY24. Ebitda stands for earnings before interest, tax, depreciation and amortisation.
“The transfer will also include around 280 existing employees from the entertainment ticketing business,” OCL said in a statement, adding that the transaction generates significant profits for Paytm and cash proceeds will further strengthen the balance sheet.
Zomato Managing Director and CEO Deepinder Goyal in a letter to shareholders said, “The proposed acquisition helps us add more scale and offer newer use-cases (like movie and sports ticketing) to our customers in this segment”.
Zomato believes the deal makes it more relevant to its customers and gives an opportunity to spin off the business into a new app.
Zomato to Launch New App
Zomato will spin off the new business into a new app called ‘District’.
“We are going to call it District, which could be a game changer for each of these use cases given the need for a single brand as a destination in this segment,” Goyal added.
Zomato is keen to position ‘District’ as the brand that consumers turn to when they are thinking of going out, he added.
On Thursday, August 22, shares of One97 Communications were trading higher by Rs 11.10 or 1.94 per cent at Rs 584.2 apiece on the BSE, while Zomato’s shares were flat trading marginally lower by 0.01 per cent at Rs 260 apiece on the BSE.
Paytm built movie ticketing from the ground up, and acquired TicketNew and Insider for total consideration of Rs 268 crores from 2017 to 2018.
Recently, One97 Communications’ Paytm Payments Bank faced prohibitory action from banking regulator RBI.