The investors, reported to be Mumbai-based HNIs, wrote to the chairman of SEBI noting that they suffered losses because of the late disclosure
The investors also noted that Zomato neither confirmed nor denied the speculation about the deal, something it was supposed to do according to SEBI’s insider trading rules
The food delivery unicorn’s board approved the acquisition of Blinkit for INR 4,447 Cr ($568 Mn) on June 24
In a letter written to the chairman of the Securities and Exchange Board of India (SEBI), several Mumbai-based high net worth individuals (HNIs) have said that food delivery giant Zomato did not make disclosures in time about its acquisition of Blinkit, the grocery delivery startup.
The food delivery unicorn had informed the stock exchanges on June 24 that its board had approved the acquisition of Blinkit for INR 4,447 Cr ($568 Mn).
However, according to an ET report, the investors said that they suffered losses because of the late disclosure. It is prudent to note here that within a week of the deal’s announcement, Zomato’s shares tanked by as much as 23%.
Even as equity research firms and their analysts have expressed positive sentiment over the deal, the decline in share prices indicates that investors are not so confident.
The identity of the investors remains unknown as Inc42 could not independently verify the same.
The letter, dated June 29, noted that there was speculation in the press about the said deal well before it actually happened. Zomato had also made two investments in Blinkit within a short span of time.
According to the investors, the food delivery unicorn neither confirmed nor denied the reports, which resulted in the share price plummeting.
However, Zomato has insisted that the disclosure was timely and according to the rules for the same. “Zomato has complied with applicable laws and relevant Sebi guidelines and made necessary disclosures upon the approval of the transaction by the board and signing of the definitive agreements,” Zomato told ET.
It is prudent to note here that SEBI requires listed companies to disclose any price-sensitive information without delay. However, the company still has the say on whether the detail is price-sensitive or not, and when to disclose the same.
Along with this, SEBI’s insider trading rules state that any price-sensitive information has to be disclosed on time to the investors. What’s more, the rules add that if such information is available in the public domain, the company has an obligation to either confirm or deny the same to the investors.
Zomato went to quite some lengths to ensure that the details of the deal were not divulged. In a disclosure on the same day, at 12:03 AM, the food delivery giant made a disclosure stating that its board will take up an ‘acquisition-related matter’ in the morning, but it did not name Blinkit.
The aforementioned disclosure read, “Pursuant to Regulation 29 of Listing Regulations, as amended, this is to inform you that a meeting of the board of directors of Zomato Limited (“the Company”) is scheduled to be held on Friday, June 24, 2022, to discuss a potential acquisition transaction by the Company.”
This comes as Zomato has seen more than INR 10,000 Cr wiped off its market cap within three days of the Blinkit deal going through.