Bengaluru: Bengaluru-based business-to-business (B2B) commerce platform Udaan has agreed to acquire LYNK Logistics, the retail distribution business owned by food delivery major Swiggy, in a deal valued at Rs 500 crore.

Udaan announced the proposed transaction on September 7, saying the acquisition will strengthen its distribution capabilities and expand its network of consumer brands and retailers across key markets.

The transaction will be settled through the issuance of preference equity shares to Swiggy in Trustroot Internet, the parent company of Udaan. Following the transaction, Swiggy will acquire an approximately 2.8% stake in Udaan.

Separately, Swiggy will make a primary investment of Rs 75 crore in Trustroot Internet, giving it an additional approximately 0.4% stake in Udaan.

LYNK to strengthen Udaan’s distribution network

LYNK is a technology-led retail distribution platform that works with consumer brands and retailers. Udaan said bringing LYNK into its operations would add complementary distribution capabilities, brand relationships and retail networks.

The acquisition is expected to help Udaan strengthen its presence in the retail distribution ecosystem while giving consumer brands access to a broader network of retailers.

Bengaluru, Hyderabad, Chennai and Kolkata together account for around 75% of LYNK’s revenue. Udaan said the acquisition would give it greater depth across these four important markets while complementing its cluster-led operating model.

The combined network is also expected to improve Udaan’s ability to connect consumer brands with a wider base of retailers.

Swiggy had acquired LYNK in 2023

Swiggy acquired LYNK in 2023 as part of its efforts to enter India’s retail distribution market. The acquisition was completed through a share-swap transaction.

The proposed sale to Udaan comes as Swiggy continues to focus on its broader business strategy, while Udaan seeks to expand its B2B commerce and distribution operations.

Rahul Bothra, CFO of Swiggy, said the combination would bring together LYNK’s capabilities and Udaan’s scale and technology-led platform.

“Bringing LYNK together with udaan, the market leader, combines complementary capabilities with udaan’s scale and technology-led platform serving India’s retail ecosystem,” he said.

Udaan strengthens financial position

The LYNK acquisition follows Udaan’s recent $160 million recapitalisation, which included fresh equity, new debt and debt-to-equity conversion.

The recapitalisation involved Lightspeed Venture Partners, M&G Investments and Moonstone Capital. The exercise also included around $45 million in private credit financing from a leading global investment management firm.

Udaan said the fundraising and restructuring exercise strengthened its balance sheet and improved its financial flexibility as it works towards profitable growth and long-term public-market readiness.

The company has been working to improve its operating performance and reduce cash burn.

Revenue growth and lower EBITDA burn

Udaan said its revenue grew at a compound annual growth rate (CAGR) of 25% between the fourth quarter of calendar year 2023 and the first quarter of calendar year 2026.

During the same period, its contribution margin improved by nearly 500 basis points, while EBITDA burn declined by around 70%.

The company has also been expanding its higher-margin businesses. Private labels now contribute between 15% and 25% of Staples sales across its operating cities.

Bengaluru, Udaan’s largest operating city, has also achieved EBITDA profitability, according to the company.

These developments form part of Udaan’s broader strategy to build a more efficient and financially sustainable business ahead of its long-term public-market ambitions.

Deal expected to complement Udaan’s growth strategy

Udaan co-founder and CEO Vaibhav Gupta said the transaction reflects the potential of India’s eB2B market and the progress made by the company in developing a sustainable business model.

“This deal is a strong endorsement of the huge eB2B opportunity and the progress udaan has made in building an efficient and sustainable business,” Gupta said.

The acquisition is expected to combine LYNK’s relationships with consumer brands and retailers with Udaan’s existing technology platform and distribution scale.

For Udaan, the transaction could provide additional avenues for growth in the highly competitive B2B commerce and retail distribution sector.

The acquisition is subject to customary closing conditions as well as applicable regulatory approvals.

Kotak Investment Banking acted as financial adviser to Udaan on the transaction.