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Tata talks to buy 80% stake in India’s largest e-grocer – Big Basket for $1.3 Billion

After 5 months of intercessions, the TATA group is almost about to strike a deal with Big Basket for around 80 percent stake in exchange for around $ 1.3 billion, this deal will value India’s largest online grocery store at around $ 1.6 billion.   Tata group can purchase upto 50 – 60 % stake from existing investors including Chinese giant, Alibaba and few other key investors.

The TATA group will pervade fresh money into Big basket by buying new shares of about 20 – 30 % of Big basket which will give Tata group almost 80% in Big Basket. The deal is likely to be formally announced in next few weeks. Tata son’s chairman ‘N Chandrasekaran’ had earlier said that the conglomerate was planning a “super app” to consolidate its consumer brands as it will competes against Amazon and Reliance Industries, who have made their positions on India’s booming e-commerce market.

This deal will also help Tata group in designing its proposed ‘Super App’ by adding a wide range of household items and grocery products.

“The app would offer services such as food and grocery, fashion, electronics, insurance, education, healthcare and bill payments” as said by Chandrasekaran at company’s annual meeting.  Bengaluru-based company BigBasket is head-on-head with Flipkart and Amazon’s “Fresh” service as more consumers stay indoors and choose to shop online during the COVID-19 outbreak.

The Tata Group and BigBasket did not immediately respond to a the requests for comment. A spokeswoman for Tata had declined for commenting and on the other hand BigBasket didn’t respond to requests for comment. 

Tata talks to buy 80% stake in India’s largest e-grocer - Big Basket for $1.3 Billion
Tata talks to buy 80% stake in India’s largest e-grocer – Big Basket for $1.3 Billion

Mumbai-based Tata Group, with a combined revenue of about $113 billion and with brands such as Jaguar Land Rover and tea maker Tetley is looking forward for local e-commerce assets at a time when the race for Indian online shoppers is gearing up.

While billionaire Mukesh Ambani’s JioMart is starting to revolutionize the industry governed by the local units of Amazon.com Inc. and Walmart Inc., Tata is seeking potential acquisitions for narrowing the gaps with its rival companies.

Online grocery in India has been growing hugely on this pace during the pandemic, but the field is still wide open as none of the players has yet made a dent. About half of India’s $1 trillion retail market comprises grocery sales and there is great potential for the growth.

The pandemic is abbreviating timelines for structuring in-house capabilities for Tata. Walmart’s $16 billion acquisition of Indian online retailer, Flipkart, in the summer of 2018, could serve as a playbook. Flipkart is now on a face-off with Amazon in the India market.

The sources said that although the talks have been ongoing for some time, it is still work-in-progress as far as the specifics go.  It may eventually not lead to a agreement at all. According to sources, This is not that easy deal to get through with so many investors involved… but there should be some finality to the talks in upcoming weeks.

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