Flipkart in talks to acquire Dunzo despite ownership structure concerns

According to Industry reports, Flipkart, a major e-commerce player in India backed by Walmart, has been in discussions regarding the potential acquisition of Dunzo, an on-demand delivery platform.
However, one major point of contention appears to be the complexities surrounding Dunzo's ownership structure, which has reportedly hindered both parties from reaching a deal.

Dunzo, a hyperlocal delivery startup, received backing from Reliance Retail in 2022, with the latter acquiring a 26 percent stake for $200 million. Additionally, Alphabet's Google has also invested in Dunzo.
In October 2023, Dalvir Suri, one of Dunzo's co-founders, departed from the company amid financial challenges, including a funding shortfall, delayed payments to staff, and staff layoffs. Dunzo acknowledged undergoing organizational restructuring at that time, with the B2B vertical, Dunzo Merchant Services (DMS), continuing under new leadership.

Therefore, these discussions come during a challenging period for Dunzo, as the company has faced difficulties in raising funds and meeting payroll obligations. Despite having raised approximately $500 million thus far, Dunzo has seen its position in the hyperlocal delivery market eroded by competitors such as Zepto, Swiggy, and Zomato’s BlinkIt.

In response, Dunzo has refuted its claims, labeling them as "hearsay." The company has stated that it is focused on achieving free cash flow break-even by March 2024 and has not engaged in any discussions regarding the acquisition of its business with any entity.
These developments suggest a complex landscape for any potential acquisition deal involving Dunzo, with Flipkart navigating through various stakeholders and challenges.