Flipkart is reportedly in discussions to acquire Dunzo, a delivery startup backed by Reliance Industries.

Flipkart, bolstered by backing from Walmart, is exploring the prospect of acquiring Dunzo, an on-demand delivery service platform based in India, as reported by TechCrunch on Tuesday. However, negotiations have encountered hurdles due to the intricate ownership arrangement of Dunzo, hindering the progress toward a potential deal. Despite ongoing discussions, the intricacies surrounding Dunzo’s ownership structure have complicated the path to reaching a mutual agreement between Flipkart and the delivery service platform.

Reliance Industries’ retail arm, which acquired a significant 26 percent stake in Dunzo in 2022 for a substantial sum of $200 million, holds a pivotal position in the potential acquisition scenario. The report highlights that Reliance Industries has yet to greenlight any proposed deal between Flipkart and Dunzo, suggesting that the retail conglomerate’s stance plays a crucial role in shaping the outcome of the acquisition talks. As a result, the complexities associated with Dunzo’s ownership dynamics pose a significant obstacle to reaching a conclusive agreement between the involved parties.

The impasse underscores the challenges inherent in navigating the intricate web of ownership structures and stakeholder interests in the Indian e-commerce and delivery services landscape. As Flipkart, backed by Walmart’s resources, seeks to expand its market presence and capabilities, the potential acquisition of Dunzo presents an opportunity to bolster its logistics and delivery infrastructure.

However, the need to navigate the complexities of Dunzo’s ownership and secure approval from Reliance Industries underscores the complexities and intricacies involved in pursuing strategic acquisitions in the dynamic Indian market.

Dunzo, in an emailed response to Reuters, denied having “any conversation with any player for an acquisition of the business”.Flipkart and Walmart did not immediately respond to Reuters’ requests for comment.Cash-strapped Dunzo, which is also backed by Alphabet’s Google, has announced restructuring, deferment of salaries and layoffs in the recent past.

Last year in April, Dunzo had secured funding of $75 million (roughly Rs. 614 crores) through convertible notes and had laid off about 30 percent of its staff as it planned a revamp of its business model. Key backers Reliance Retail and Alphabet had added about $50 million (roughly Rs. 409 crores) of the funding, with other existing investors putting in the rest.

Under the new business model, the company was said to cut about 50 percent of its dark stores and run only those that could be profitable or were nearing that threshold.In July 2023, Walmart paid $1.4 billion (roughly Rs. 11,520 crore) to buy out hedge fund Tiger Global’s investment in Flipkart. The transaction valued the e-commerce firm at $35 billion (roughly Rs. 2,88,010 crore).