Zomato will spin off the new business into a new app called ‘District’
New Delhi: Online food delivery platform Zomato will acquire Paytm’s entertainment ticketing business for Rs 2,048 crore to strengthen its “going-out” segment in a deal that will help the troubled fintech firm to sharpen its focus on core payments and financial services distribution.
Paytm’s entertainment ticketing business covers movies, sports, and events (live performances).
The boards of Zomato and One 97 Communications Ltd (OCL) have approved the all-cash deal.
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.
The combined entertainment ticketing business has a scale of Rs 297 crore in revenue and Rs 29 crore in adjusted EBITDA in FY24.
“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.
Announcing the deal, Paytm said it allows the fintech to strengthen its focus on core payments and financial services distribution. Paytm said with its strong focus on long-term value creation, the company remains confident in substituting revenue from its entertainment ticketing business by expanding core business areas of payments and financial service distribution.
“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.
On the other hand, 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.
“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.
OTPL was incorporated on 23 November 2007, in India. It is in the business of listing and sale of movie tickets and other services. It had a turnover of Rs 13.14 crore in the fiscal ended 31 March 2024.
WEPL was incorporated on 21 December 2015. It is in the business of listing and sale of event tickets and other services. Its turnover in the FY24 was Rs 236.03 crore.
Paytm said the 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 a significant opportunity to cross-sell these services and grow its market presence as a leading financial services distribution player,” Paytm said.
During a transition period (up to 12 months), the movie and event tickets will continue to be available on the Paytm app, as well as on the TicketNew and Insider platforms, ensuring a smooth and uninterrupted experience for users and merchant partners.
Paytm said the deal underscores its success in building businesses and creating value for shareholders.
Zomato’s Goyal said the District app is expected to be launched anytime in the next few weeks.
Post this acquisition, he said Zomato’s going-out business would be spread across multiple different platforms.
Its existing going-out business (dining-out + event ticketing) would continue to run on the Zomato app, and the acquired business — movie, sports and event ticketing — would continue to run on Paytm’s main app for a transition period of up to 12 months, along with Insider and TicketNew apps. Both of these would get transferred to Zomato as part of the transaction.
District app will duplicate the offerings above and over time, we will gradually nudge our customers to move from the Zomato, Paytm, Insider, and TicketNew apps to the District app.
“Once most customers start transacting on the District app, we will remove the duplication and shut down this business on all the other apps. Eventually, there will just be a button to launch the District app on the Zomato app (like it is for Blinkit today) so that we continue to tap into the large customer base of Zomato,” he added.
