Budget hospitality startup Oyo Rooms is reportedly in advanced talks with cloud kitchen company FreshMenu to acquire it for around $30-40 million.
FreshMenu shareholder Zodius Capital may be paid in cash while, the founders and investors Lightspeed Venture Partners and GrowthStory will be allocated Oyo shares, if the deal isfinalised, the Times of India reported citing sources.
Lightspeed a common investor in both the companies, brought the two together to the discussion table.
If the deal goes through successfully, Oyo will make its foray into online food delivery business. The move is said to enhance its hospitality business portfolio and food is an essential element to its operations.
Bengaluru-based FreshMenu had been looking to raise capital for the last few months. The deal is being considered as a win-win proposition for both the companies.
"Oyo is building a food team, which will help FreshMenu expand to more cities under the Oyo brand name. The idea could be more about adding the element of food to further build the hospitality business rather than getting into the food delivery entirely," a source told the daily.
Both Oyo and FreshMenu declined to comment on the speculation. According to the report, FreshMenu clocks about 15,000-20,000 orders daily and if Oyo acquires the startup kitchen, it will leverage highly on the company's infrastructure of 1,70,000 rooms across India.
Oyo's advanced rounds of these discussions with FreshMenu follow after it recently raised close to $1 billion from Japan's SoftBank with participation from ride-hailing companies Grab and Didi Chuxing taking up its valuation to $5 billion.