SoftBank Confirms: OYO Rooms has acquired Zo Rooms

Budget hotel accommodation aggregator Oyo Rooms has acquired rival Zo Rooms. Oyo’s lead investor, Japanese telecom and internet firm Softbank, announced the acquisition in its earnings report on Wednesday without specifying the deal value. The deal is likely to be signed in the next 15-20 days.

The founders of ZO Rooms will exit the company post a transition phase of 3 months, according to two people aware of the deal terms. Zo was founded by Dharamveer Chouhan, Akhil Malik, Paavan Nanda, Tarun Tiwari, Chetan Singh Chauhan, Abhishek Bhutra and Siddharth Janghu in 2013. They will, however, continue to run their first venture, hostel backpack chain Zostel. Many ZO Rooms employees have already quit.

The founders of Zostel Hospitality Pvt. Ltd, which runs Zo Rooms, and investors will get a 7% stake in the combined entity, the people said, requesting anonymity.

While the Zo founders will get close to a 2.5% stake, the rest will be held by Tiger Global Management LLC, Orios Venture Partners, angel investor Zishaan Hayath and Mato Peric, ex-managing director at Rocket Internet, among.

Oyo has been operating in more than 165 Indian cities through close to 4,500 hotels. Last month, it started operations in Malaysia, the company’s first venture outside its home market.

With the acquisition of Zo Rooms, Oyo becomes a clear market leader in the budget accommodation segment which recently saw the entry of large online travel firms, including MakeMyTrip, Yatra Online Pvt. Ltd and Goibibo.

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