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<ul><li>OYO has 21 cases registered against the company, subsidiaries, directors and promoters.</li><li>The company has spent nearly ₹1,166 crore as legal and professional fees in the last three financial years.</li><li>It also estimates that any adverse outcome in legal proceedings involving <keyword id="2232457" type="General" weightage="20" keywordseo="zostel" source="Orion">Zostel</keyword>, may adversely impact their business.</li></ul>The extensive list of lawsuits against hotel and hospitality giant OYO is no secret. As the company has grown, so have the cases being filed against it. And the company does not expect this number to go down any sooner. OYO — in its draft red herring prospectus (DRHP) for the $1.2 billion initial public offering (IPO) — had noted that the number of legal disputes and proceedings against the company may continue to increase as the company scales further. It is important to note that OYO has 21 cases registered against it, its subsidiaries, its directors and promoters. This includes the petition filed by Federation of Hotels and Restaurants Association of India (FHRAI) in front of Competition Commission of India (CCI) against MakeMyTrip, Goibibo and OYO for dominating online travel agents (OTA) market. Treebo Hotels has raised similar allegations against the company. As per the DRHP, the company has spent nearly ₹1,166 crore as legal and professional fees in the last three financial years. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Legal and professional fee </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY2019 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹226 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY2020 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹618.6 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY2021 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹322.9 crore </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source: OYO’s DRHP "The number and significance of these claims, disputes, and proceedings have increased as our Company has grown larger, the number of bookings on our platform has increased, our brand awareness has increased and the scope and complexity of our business have expanded, and we expect that the number and significance of such claims, disputes and proceedings will continue to increase," OYO’s DRHP revealed. The filing also noted that there are no outstanding litigation proceedings involving any OYO group companies that “have a material impact on our company”. The battle with Zostel is not a simple one either One of the biggest ongoing legal battles OYO is fighting at the moment is the one with Zostel Hospitality, which has reached out to India’s market regulator Securities and Exchange Board of India (SEBI) to reject OYO’s IPO. The company has reportedly called OYO’s IPO as “illegal”. OYO was in talks for a merger with <keyword id="2825269" type="General" weightage="20" keywordseo="zo-rooms" source="Orion">Zo Rooms</keyword>, a subsidiary of Zostel Hospitality, back in 2015, but the talks fell through. This eventually led to arbitration between the two companies. A Supreme Court-appointed arbitrator had found OYO to be in breach of the agreement, which made Zostel eligible for a 7% stake in OYO’s parent company Oravel Stays. OYO challenged the award before the Delhi High Court earlier this year. The case is currently ongoing at the Delhi High Court. “Any adverse outcome in legal proceedings involving Zostel may materially and adversely affect our business, reputation, prospects, results of operation and financial condition,” OYO says in its DRHP. Last month before OYO filed its DRHP, Zo Rooms<a href="https://www.businessinsider.in/business/startups/news/oyo-blames-zo-rooms-for-forum-hunting-after-zostels-latest-plea-to-stop-its-ipo/articleshow/86605631.cms"> moved a fresh petition </a>to the high court in order to restrain OYO from modifying its shareholding pattern, which would prevent the company from raising any more capital and even halt its IPO. OYO — which earlier accused Zostel of forum hunting — has condemned Zostel’s move to approach SEBI, saying that the company is attempting to overreach the ongoing Delhi high court proceedings. "After multiple attempts in the courts and arbitration tribunal, Zostel’s communication shows unnecessary and repetitive efforts to create a wrong perception," an OYO spokesperson told Business Insider. The company has reiterated that the talks between Zo Rooms and OYO were in exploratory discussions and “no definitive agreements” were finalised. It added that the award of the Supreme Court appointed arbitrator did not direct OYO to issue any shareholdings to Zostel. “Nothing in the award prevents or restrains OYO from going ahead with the same," OYO’s legal counsel said. SEE ALSO <a href="https://www.businessinsider.in/cryptocurrency/news/bitcoin-crosses-57000-for-the-first-time-in-five-months-altcoins-continue-to-struggle/slidelist/86957497.cms" data-type="tilCustomLink">Bitcoin crosses $57,000 for the first time in five months — altcoins continue to struggle</a> <a href="https://www.businessinsider.in/tech/mobile/news/samsung-plans-to-launch-2nm-chipsets-by-2025-could-power-its-2026-flagships/articleshow/86959127.cms" data-type="tilCustomLink">Samsung plans to launch 2nm chipsets by 2025, could power its 2026 flagships</a> <a href="https://www.businessinsider.in/business/corporates/news/cyrus-mistrys-sterling-wilson-was-at-the-right-place-at-the-right-time-for-mukesh-ambanis-green-energy-ambitions/articleshow/86952399.cms" data-type="tilCustomLink">Cyrus Mistry's Sterling &amp; Wilson was at the right place at the right time for Mukesh Ambani's green energy ambitions</a>

It's not just Zostel, OYO has 20 other lawsuits to fight

<ul><li><keyword id="2825269" type="General" weightage="20" keywordseo="zo-rooms" source="Orion">Zo Rooms</keyword> has moved a petition to restrain <keyword id="2808667" type="General" weightage="20" keywordseo="oyo" source="Orion">OYO</keyword> from modifying its shareholding pattern.</li><li>OYO was in talks for a merger with Zo Rooms in 2015, but the talks fell through.</li><li>Zo Room’s legal counsel adds that any issuer should not be eligible to make an IPO if there are any outstanding convertible securities.</li><li>OYO has condemned Zo Rooms for misrepresentation of facts and moving to multiple forums.</li></ul>Update: The article has been updated to include the Delhi high court's verdict issued on September 29. Hotel and hospitality firm OYO is reportedly all set to hit its next milestone this week, by filing the<a href="https://www.businessinsider.in/business/startups/news/oyo-may-file-for-1-billion-ipo-next-week/articleshow/86448073.cms"> preliminary paperwork</a> for its upcoming initial public offering (IPO). However, it has found itself in the middle of another legal battle before it takes a step ahead. Hotel rooms aggregator Zo Rooms, which is managed by <keyword id="2232457" type="General" weightage="20" keywordseo="zostel" source="Orion">Zostel</keyword> Hospitality, has moved a new petition to the Delhi High Court in order to restrain OYO from modifying its shareholding pattern. This petition has been filed to restrict the hotel and hospitality giant from raising any more capital and eventually put a stop on its public issue. "An issuer shall not be eligible to make an initial public offer if there are any outstanding convertible securities or any other right, which would entitle any person with any option to receive equity shares of the issuer...,” Zo Rooms’ legal counsel TMT Law Practice said, in a <a href="https://economictimes.indiatimes.com/tech/startups/zostels-petition-in-delhi-hc-adds-a-legal-twist-to-oyos-ipo-saga/articleshow/86589984.cms">conversation</a> with The Economic Times. They added that OYO should not be allowed to file draft red herring prospectus (DRHP) till this matter is resolved. OYO may postpone its DRHP by a week, as per The Economic Times report. Court adjourns matter until next month The Delhi high court on September 29 (Wednesday) adjourned the hearing in the OYO-Zo Rooms case to October 7. It has asked ZO Rooms to submit a rejoinder on the record. Amit Sibal who was appearing on behalf of Zo Rooms, requested that their shares should be preserved till next hearing date. Sibal added that Zo Rooms intention was not to stop OYO's IPO. "Now if they go ahead and conduct the initial public offering then these shares will be no longer available for allotment to me in that eventuality. Therefore I was seeking that there be protection that if I succeed and they do not succeed in their objections to the award then at least my ability to have those shares is preserved," said Sibal. The court categorically denied this, saying that this couldn't be done without hearing the "contested matter". OYO condemns Zostel for ‘misrepresenting’ facts An OYO spokesperson told Business Insider, “OYO deplores Zostel’s repeated attempts at misrepresenting case facts and threats of forum hunting. OYO condemns Zostel’s self-serving misrepresentation of case facts to the media and it is an attempt to overreach Delhi HC [Delhi High Court] proceedings.” The hotel and hospitality giant further added that Zostel’s claims are “baseless” and termed it “forum hunting”. The term “forum hunting” or “bench hunting” is usually used when a particular petitioner goes to a specific judge or court in the hope of a favourable verdict. Meanwhile OYO’s legal counsel added that the petition filed by Zostel seeks relief “beyond the scope of award”. The award does not provide any relief that entitles them to “freeze” OYO’s shareholding pattern, the counsel said, while adding that the case does not merit. Business Insider has reached out to Zostel and the story will be updated with responses, if any. The ongoing battle The Delhi high heard the petition on September 29. The court also took up a plea by OYO to grant stay on an earlier order from the Supreme Court of India appointed arbitrator in breach of its <a href="https://timesofindia.indiatimes.com/business/india-business/oyo-in-breach-of-binding-agreement-with-zo-rooms-arbitrator/articleshow/81380041.cms">agreement</a> with Zo Rooms. OYO was in talks for a merger with Zo Rooms in 2015, but the talks fell through. This eventually led to arbitration between the two companies. Zo, citing the arbitrator's order, previously noted it is eligible for a 7% stake in OYO’s parent company Oravel Stays. In that case, Zo Rooms may be eligible for a stake worth $672 million in OYO, which is now worth $9.6 billion. OYO, however, has reiterated that the entire process of acquisition was merely at the <a href="https://www.businessinsider.in/business/startups/news/oyo-vs-zo-zostel-claims-victory-while-the-ritesh-agarwal-led-firm-says-theres-still-room-to-win/articleshow/81386851.cms">stage of exploratory discussions</a> and no definitive agreements were finalised between the two parties. SEE ALSO <a href="https://www.businessinsider.in/stock-market/news/indigo-spicejet-hdfc-amc-future-group-and-other-top-stocks-to-watch-out-for-on-september-29/slidelist/86600892.cms">IndiGo, SpiceJet, HDFC AMC, Future Group and other top stocks to watch out for on September 29</a> <a href="https://www.businessinsider.in/stock-market/news/aditya-birla-sun-life-amc-ipo-opens-today-and-analysts-bullish-on-the-growing-mutual-fund-industry/articleshow/86590770.cms">Aditya Birla Sun Life AMC IPO opens today, analysts bet high on the growing mutual fund industry</a> <a href="https://www.businessinsider.in/business/startups/news/swiggy-tightens-focus-on-grocery-delivery-as-zomato-steps-out/articleshow/86582683.cms">Swiggy tightens focus on grocery delivery, as Zomato steps out</a>

OYO blames Zo Rooms for ‘forum hunting’ after Zostel’s latest plea to stop its IPO

<ul><li>OYO and <keyword id="2825269" type="PERSON" weightage="20" keywordseo="Zo-Rooms">Zo Rooms</keyword> have been in a legal tussle for over three years now.</li><li>The dispute was over the merger between OYO and Zo Hostels, where the latter said it was denied its 7% shareholding in Oravel Stays, the parent company of OYO.</li><li>The tribunal said that Zo Rooms’ parent <keyword id="2232457" type="PERSON" weightage="20" keywordseo="Zostel">Zostel</keyword> Hospitality was entitled to claim relief and costs in the case, but acknowledged that definitive agreements weren’t executed.</li></ul>After a three-year long battle, the legal verdict on OYO Hotels and Homes and Zo Hostels is out, but both companies continue to sing their own tunes. The dispute was over the merger between OYO and Zo Hostels, where the latter said it was denied its 7% shareholding in Oravel Stays Pvt. Ltd, the parent company of the Ritesh Agarwal-led OYO. The Arbitral Tribunal comprising former Chief Justice of India AM Ahmadi said that Zo Rooms’ parent Zostel Hospitality Pvt. Ltd was entitled to claim relief and costs in the case, but acknowledged that definitive agreements of the deal weren’t executed. Two sides of the same coin Zo Rooms, which was a hotel aggregator founded by Zostel founders, claimed victory in the case saying that the agreement between OYO and Zo was binding. “We welcome the judgement by the hon'ble tribunal. Beyond the monetary compensation, it was a fight for our rights and reputation. We are extremely relieved with the judgement that the arbitral tribunal has pronounced after diligently evaluating the merits and evidence produced by us over the last 3 years,” said Paavan Nanda, co-founder of Zostel, who led the process, in a statement. Nanda is also the co-founder of gaming platform WinZO. As per Zo, OYO now has to compensate the stakeholders of Zo for their 7% shares. “If the order from the arbitrator is to be given effect, allotment of 7% to ZO Rooms’ shareholders will make this outcome the biggest exit in the Indian startup ecosystem, surpassing the Snapdeal-Freecharge Deal of $400 Million back in 2015,” said Zo in a statement. However, OYO refuted the claims and is currently evaluating legal remedies to challenge the award. The hospitality firm, valued at $9 billion, said that even with the legal battle, Zo ‘continues to misrepresent and latch on to OYO’. OYO said that the arbitration hasn’t given any direction for issuance of shares as the definitive agreement was neither agreed upon nor consummated and therefore closing conditions were far from being achieved. “The Tribunal has ruled and categorically acknowledged that the definitive agreements, which are extremely important documents for any M&amp;A transaction, were neither finalised nor agreed upon,” read OYO’s statement. Here’s a look at the timeline of events 2015: OYO’s lead investor SoftBank in its annual report claims that the Ritesh Agarwal-led startup had acquired its rival Zo Rooms. September, 2016: Merger talks between the two companies fall through. 2017: OYO <a href="https://techcrunch.com/2017/10/26/oyo-zo-rooms-deal/">confirms</a> that it has ended all discussions in the matter and says, “we tried to identify potential value in their business but could not reach an outcome”. 2018: Zo Rooms takes OYO to court claiming ‘data theft’ while doing the due diligence during the acquisition talks. February, 2018: Gurugram court hands the ruling in favour of OYO. Zo Rooms <a href="https://www.techcircle.in/2018/02/26/court-quashes-zo-rooms-plea-against-oyo/">says</a> it doesn’t have the financial bandwidth to ‘incur prolonged legal costs’. However, soon after Zo approached the Supreme Court. October, 2018: Supreme Court appoints a three-judge bench to evaluate the matter. January, 2020: Zo Rooms once again files a plea over OYO’s restructuring of its board, says that the restructuring will hamper Zo’s claims of 7% stake in OYO. March, 2021: The tribunal said that Zo Rooms parent Zostel Hospitality was entitled to claim relief and costs in the case, however acknowledged that definitive agreements weren’t executed. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/bootstrapped-online-travel-aggregator-easemytrip-makes-its-way-to-the-public-markets/articleshow/81326200.cms">INTERVIEW: Bootstrapped online travel aggregator EaseMyTrip makes its way to the public markets</a>

OYO vs Zo – Zostel claims victory while the Ritesh Agarwal-led firm says there’s still room to win

Budget hotel aggregator <keyword id="2550719" type="UNKNOWN" weightage="100" keywordseo="OYO-Rooms">OYO Rooms</keyword> <a href="http://www.businessinsider.in/Oyo-Rooms-may-buy-its-smaller-rival-Zo-Rooms/articleshow/50024196.cms">was all set to acquire rival Zo rooms</a>, but certain complications could cause a delay in the deal. One of its early investors has come up with some fresh demands, which has stalled the acquisition process. 
 As per sources, <keyword id="1679438" type="UNKNOWN" weightage="100" keywordseo="VentureNursery">VentureNursery</keyword>, a Mumbai-based accelerator which was the first investor in OYO, has said that it should be given access to information that large investors typically receive from a company along with the right to exit from the combined entity and that too at a pre-determined valuation. 
 
Also read: Exclusive: <a href="http://www.businessinsider.in/Exclusive-OYO-Rooms-CEO-says-soon-staying-at-OYO-hotels-will-be-like-staying-at-luxurious-homes-Easy-walk-in-easy-walk-out/articleshow/49416395.cms">OYO Rooms’ CEO says soon staying at OYO hotels will be like staying at luxurious homes! Easy walk-in, easy walk-out</a> 
 
"VentureNursery is demanding right to information and exit at $700-million valuation, both terms which are unacceptable to OYO's larger shareholders," a person directly familiar with the development told ET. 
 
Experts and investors opine that even though VentureNursery does not have enough shares to block the proposed merger, its demands should be addressed as it can otherwise create hurdles in the works for <a href="http://www.businessinsider.in/OYO-Rooms-knows-the-way-to-the-customers-heartis-through-his-stomach/articleshow/49800486.cms">OYO</a>, which is looking to raise <a href="http://www.businessinsider.in/OYO-Rooms-ties-up-with-PayPal-to-make-its-global-expansion-more-efficient/articleshow/51312289.cms">fresh capital</a>. 
 The reason behind these sudden demands could be the disagreement within OYO, as some managers are not convinced about the terms of <keyword id="2825269" type="UNKNOWN" weightage="100" keywordseo="Zo-Rooms">Zo Rooms</keyword> negotiation, giving it a 7% stake in the company.

OYO's Zo acquisition could be delayed because of its first investor

The Delhi High Court on Monday nixed a plea filed by hostel chain <keyword id="2232457" type="General" weightage="20" keywordseo="zostel" source="Orion">Zostel</keyword> (Zo Rooms) seeking to restrain OYO Hotels and Homes from proceeding with its initial public offering (IPO) process, claiming that the former has seven per cent shareholding in the tech hospitality major. Justice C. Hari Shankar dismissed the plea of Zostel, seeking an interim order to restrain or injunct OYO from modifying its shareholding structure or cap table including by way of an Initial Public Offering (IPO). The dispute between OYO and Zostel dates back to 2015 when they had begun negotiations for a merger but the talks fell through. This eventually led to the arbitration. The two companies were at loggerheads over the arbitration award. OYO's contention that the Arbitration Tribunal adjudicating the dispute between the two entities has granted no specific relief to Zostel in terms of receiving ownership in the hospitality major. This was a result of OYO calling off its acquisition of Zostel Rooms citing the inability to reach an outcome to identify potential value in the latter's business after due diligence. Zostel had said that its shareholders are entitled to seven per cent mirror-image shareholding in the OHHPL (Oyo Hotels and Homes Private Ltd) as per the terms of the scheme of demerger of OYO's (Oravel Stays Private Ltd) "Indian Business" into the OHHPL, approved by the NCLT Ahmedabad. So, any market offer should only follow the implementation of this scheme. Oyo also sought in the High Court a stay on an earlier order from a Supreme Court-appointed arbitrator who had said that Oyo was in breach of its agreement with smaller rival Zostel over the proposed acquisition. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/indian-stock-market-is-bummed-out-for-at-least-three-reasons-and-none-of-them-are-going-away-in-a-hurry/articleshow/89561390.cms">The market in India is bummed out for at least three reasons and none of them are going away in a hurry</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sbi-and-icici-bank-lost-over-10000-crore-to-abg-shipyard-bank-fraud/articleshow/89559899.cms">SBI and ICICI Bank investors pay the price for the nearly ₹10,000 crore lost to the biggest bank fraud ever in India</a>

Road to IPO for OYO Rooms is clear as Delhi HC rejects Zostel's plea that restrained the IPO

<ul><li>Misrepresentation of facts is a common acquisition faced by <keyword id="2808667" type="General" weightage="20" keywordseo="oyo" source="Orion">OYO</keyword> by both these entities.</li><li><keyword id="974036" type="General" weightage="20" keywordseo="fhrai" source="Orion">FHRAI</keyword> has also accused OYO of indulging in anti-competitive business practices.</li><li><keyword id="2232457" type="General" weightage="20" keywordseo="zostel" source="Orion">Zostel</keyword> and OYO’s altercation arises out of a failed deal five years ago.</li></ul>The Federation of Hotel and Restaurants of India (FHRAI) — which claims to have over 55,000 hotels and 500,000 restaurants under its umbrella — has reached out to the Securities and Exchange Board of India (SEBI), seeking suspension of OYO’s $1.2 billion initial public offering (IPO). This is a second entity to reach out to SEBI with such demand. This is in addition to the<a href="https://www.businessinsider.in/business/startups/news/its-not-just-zostel-oyo-has-20-other-lawsuits-to-fight/articleshow/86959438.cms"> 21 legal battles OYO is fighting</a>. Earlier this month, Zostel had approached the market regulator seeking cancellation of OYO’s IPO. Both these entities have completely different reasons behind this demand, however misrepresentation of facts is a common acquisition faced by OYO by both these entities. OYO claims that they have made adequate disclosures in its DRHP. The company had condemned both Zostel and FHRAI previously for their allegations. FHRAI — in an eight-page-long letter to SEBI — highlighted that OYO is engaged in “unfair, anti-competitive and fraudulent dealings and business practices.” FHRAI’s complaint The industry body also mentioned that they had approached the Competition Commission of India (CCI) as well, highlighting the anti-competitive practices of OYO. The antitrust watchdog had also initiated an investigation into OYO’s business and it is known to be in advanced stages, FHRAI added. Even though OYO has disclosed the implications of CCI’s final judgement on its business in its draft red herring prospectus (DRHP), it has not highlighted that the antitrust watchdog has the power to direct behavioural changes to be undertaken. This may completely upset the anti-competitive business practices engaged by Oravel, the association said. Similarly, OYO has “failed to disclose” the nature and consequences of litigations pending against it and its subsidiaries” that have the potential to disrupt the business, '' FHRAI added. “That apart from the aforesaid non-disclosures/mis-disclosures, it is pertinent to point out that there has been not a single case to our knowledge that where a company being investigated for anti-competitive practices by the Director General of the CCI has been permitted to initiate an IPO by the SEBI. In view of the same, Oravel’s proposed IPO is premature and ought to be rejected/ deferred at this stage while a major investigation by the CCI remains pending,” FHRAI noted in the letter accessed by Business Insider India. OYO had earlier said, "We strongly condemn the ill informed, manufactured and baseless lies and allegations about inadequate disclosures in our DRHP. FHRAI member hotels must demand accuracy and accountability from their office bearers about the falsehoods they are propagating." "FHRAI has assumed that no one will verify the accuracy of their claims by cross checking existing disclosure in the DRHP. OYO has been very transparent in disclosing all material cases and disputes we are facing in absolute adherence with the regulations. Zostel’s demand OYO was in talks for a merger with Zo Rooms, a subsidiary of Zostel Hospitality, back in 2015, but the talks fell through. This eventually led to arbitration between the two companies. A Supreme Court-appointed arbitrator found OYO to be in breach of the agreement, which made Zostel eligible for a 7% stake in the Gurugram-based hostel and hospitality giant. This 7% stake would be worth $672 million, as OYO is now worth $9.6 billion. OYO challenged the award before the Delhi High Court earlier this year. The case is currently ongoing at the Delhi High Court. Zostel had also <a href="https://www.businessinsider.in/business/startups/news/oyo-blames-zo-rooms-for-forum-hunting-after-zostels-latest-plea-to-stop-its-ipo/articleshow/86605631.cms">moved a fresh petition </a>last month to the high court in order to restrain OYO from modifying its shareholding pattern, which would prevent the company from raising any more capital and even halt its IPO. OYO had condemned Zostel’s plea SEBI, saying that the company is attempting to overreach the ongoing Delhi high court proceedings. "After multiple attempts in the courts and arbitration tribunal, Zostel’s communication shows unnecessary and repetitive efforts to create a wrong perception," an OYO spokesperson had told Business Insider. The company has reiterated that the talks between Zo Rooms and OYO were in exploratory discussions and “no definitive agreements” were finalised. It added that the award of the Supreme Court appointed arbitrator did not direct OYO to issue any shareholdings to Zostel. OYO had previously accused Zostel of forum hunting. SEE ALSO <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-lost-subscribers-for-the-first-time-in-10-quarters-but-theres-good-news-for-mukesh-ambani-in-this-too/articleshow/87251614.cms" data-type="tilCustomLink">Reliance Jio lost subscribers for the first time in 10 quarters but there's good news for Mukesh Ambani in this too</a> <a href="https://www.businessinsider.in/stock-market/news/berger-asian-shalimar-and-indigo-paints-share-price-down-from-last-five-days/articleshow/87254637.cms" data-type="tilCustomLink">Paint makers stress over high raw material costs and fewer tinting machines even as festive demand picks up</a> <a href="https://www.businessinsider.in/business/startups/news/loss-making-groww-is-now-the-most-valued-investment-platform-even-though-some-of-its-peers-make-profits/articleshow/87249142.cms" data-type="tilCustomLink">Loss-making Groww is now the most-valued investment platform even though some of its peers make profits</a>

OYO IPO now faces a hurdle from a hotels lobby with 55,000 members, aside from Zostel

Although the consolidation talks are in initial stages, Oyo Rooms may buy its rival Zo Rooms. 
 
Industry experts say the consolidation is likely to take place in areas such as food delivery, local services, online classifieds as well as online retail. 
 
This move by the hotel aggregator Oyo Rooms comes after India's largest online travel agencies, MakeMyTrip and Goibibo, blocked Oyo Rooms and Zo Rooms from listing and marketing hotel properties on their websites. 
 
Oyo Rooms, which is backed by Japan's SoftBank and has an estimated worth of around Rs 2,500 crore ($400 million) after its latest funding, books around 250,000 rooms every month. 
 
Whereas, Zo Rooms, which is backed by Tiger Global and was valued at about $90 million after latest funding round, books about 100,000 rooms, which is quite small a number when compared to Oyo Rooms. 
 
However, there is no confirmation on whether the deal has been finalised and the size of the transaction during the buyout. 
 
Meanwhile, apart from this deal, we may see a number of mergers as many Internet firms are in acquiring mode, such as Quikr and Commonfloor. 
 
(Image: Thinkstock)

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It's not just Zostel, OYO has 20 other lawsuits to fight

Kritti Bhalla

OYO blames Zo Rooms for ‘forum hunting’ after Zostel’s latest plea to stop its IPO

Kritti Bhalla

OYO vs Zo – Zostel claims victory while the Ritesh Agarwal-led firm says there’s still room to win

Sanchita Dash

OYO's Zo acquisition could be delayed because of its first investor

BI India Bureau

Road to IPO for OYO Rooms is clear as Delhi HC rejects Zostel's plea that restrained the IPO

IANS

OYO IPO now faces a hurdle from a hotels lobby with 55,000 members, aside from Zostel

Kritti Bhalla

Oyo Rooms may buy its smaller rival Zo Rooms

BI India Bureau

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