Reliance Industries will acquire Justdial for $800-900 million

Reliance Industries is in advanced negotiations to buy Justdial from its founding promoters in a $800-$900 million deal, several sources aware of the transaction. If the acquisition is successful, it  would help Reliance Retail leverage Justdial's merchant database and its pan-India network to further accelerate its own local commerce and payments play. Tata Digital held talks with Justdial in March 2021 to strike a strategic alliance or pick up stake, as part of its push to enter the e-commerce space. However, these discussions now seem to have ended.

25-year-old Justdial, which went public in India in 2013, is currently the market leader in the local search engine segment, with nearly 150 million average quarterly unique visitors across multiple platforms such as mobile, app, website and its 8888888888 telephone hotline. However, the firm has struggled to evolve beyond its core offerings. Justdial is also battling an onslaught of vertical-focused ecommerce players including Urban Company (home services), Zomato and Swiggy (food delivery), and MakeMyTrip (travel).

Justdial's net profit fell by 55.9% year-on-year (YoY) to Rs 33.6 crore for the quarter ended March 31, 2021, while operating revenue dropped 25.2% YoY to Rs 175.7 crore. This week, Justdial had called for a board meeting on Friday to evaluate fundraising proposals. The deal is expected to be officially announced on that day. Reliance plans to buy shares from Justdial founder VSS Mani who along with his family controls 35.5% of the company, which is currently valued at Rs 2,387.9 crore. It would then trigger an open offer for an additional 26% stake, which could lead to a Rs 4,102 crore pay out at current share prices. If the open offer is fully subscribed to, Reliance will end up with more than 60% of the firm. Oil-to-telecom conglomerate will also infuse some primary capital into Justdial.

Justdial’s stock price has risen 52.4% in the past six months to touch a 52-week high of Rs 1,138. It closed at Rs 1,107 on Thursday, a 2.5% increase from Wednesday. Last month, Ambani had said during Reliance's annual general meeting that it would continue to acquire businesses to strengthen its offerings, sharpen its omni-channel capabilities, drive operating efficiencies and improve its talent pool. Its recent deals include Netmeds, Urban Ladder and Zivame. The firm is also in the final stages of closing the acquisition of hyperlocal grocery delivery platform Milkbasket.

 

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