ZO Rooms drags OYO Rooms to court for “data theft”

ZO Rooms drags OYO Rooms to court for “data theft”, Tiger Global-backed online hospitality aggregator ZO Rooms has dragged SoftBank-funded OYO Rooms to a Gurugram court, alleging that the latter stole its data while conducting due diligence of ZO as part of a failed acquisition of ZO Rooms by OYO.

Zostel Hospitality, the parent company of ZO Rooms, has alleged that OYO has acquired data of employees, assets, hotel properties under the pretext of accelerating the process of acquisition and is now refusing to pay the dues for the business acquired.

“…in the garb of obtaining certain confidential information, (OYO) has in fact acquired the entire business of the petitioner (ZO Rooms) and is now refusing to pay the dues owed to the petitioner,” according to the petition. ET has reviewed a copy of the petition.

Despite the transfer of the ZO Rooms’ business, OYO delayed and later refused to buy out the company, according to the court document.

ZO Rooms has alleged that OYO has caused irreparable harm to ZO Rooms for which it is solely liable to compensate. An email query sent to Zostel remained unanswered till press time.

Japanese billionaire Masayoshi Son’s SoftBank, which is an investor in OYO, had announced the acquisition of ZO Rooms in its earnings report in February 2016. Later, OYO announced that it ended all discussions on the matter.

ZO Rooms’ parent Zostel has petitioned to the court to direct OYO to deposit the revenue earned from the hotels that were acquired from ZO Rooms with the court and prevent it from diluting any of these assets.

It has also prayed to the court to pass an order for search and seizure of OYO to retrieve the stolen data and bar the company from using any of the data. It has also petitioned the court to restrain OYO from raising any funds through equity that will change the status quo.

According to the petition, the term sheet of the proposed buyout, the preference shareholders of ZO Rooms were entitled to acquire equity shares in OYO subject to a maximum of 7% of the fully-diluted shareholding of OYO, including preferred stock and equity shares.

Zostel was started in August 2013 as a chain of backpacker hostels for young travellers. In 2015 it entered the budget hotel market, competing directing with OYO.

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