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Updated December 5th, 2019 at 21:38 IST

Allcargo to buy 44% in Gati for Rs 416 crore

Allcargo will acquire around 44% stake in Gati for nearly Rs 416 crore, marking its foray into the Express logistics market.

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Allcargo Logistics, the largest integrated logistics solutions provider in the private sector, on Thursday said it will acquire around 44 percent stake in Gati for nearly Rs 416 crore, marking its foray into the Express logistics market.

Under a three-phased deal, Allcargo will first buy over 1.03 crore shares and subscribe to a preferential issue of over 1.33 crore shares (collectively 18 percent shares) held by promoters and promoter group of Gati, including Mahendra Kumar Agarwal, Mahendra Investment Advisors and TCI Finance and also Gati, at Rs 75 a share.

In the second leg of the transaction, Allcargo will make an open offer to buy another 3.17 crore more shares, representing 26 percent of the paid-up voting equity share capital (post-preferential issue and vesting of stock options) from the retail shareholders of Gati at Rs 75 a share, taking the total  deal value to around Rs 416 crore, chairman Shashi Kiran Shetty said.

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"Through this strategic transaction, we have added

another service to our portfolio by entering a segment that is

growing exponentially. With this acquisition, we will also be

able to achieve a significant share in the express logistics

space," he said.

 

According to a recent Deloitte report, the domestic express logistics industry is expected to reach Rs 48,000

Crore by 2023. With Gati under its fold, Allcargo can offer a range of logistic services, including multi modal transport,

container freight stations/inland container depots, projects and engineering solutions, warehousing, distribution, contract

logistics and logistics parks.

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"Allcargo's leadership in the global LCL (less

container load) business and Gati's domestic express

transportation segment allows us to offer end-to-end

transportation capabilities," Shetty said.

The exponential rise in cross-border and domestic e-commerce has opened up new markets for traditional express

players such as Gati, he said."With Allcargo's existing strength in the ocean transportation business and Gati's expertise in land and air transportation segments, we are now in a unique position to offer our customers a suite of truly multimodal solutions,"

Shetty said.

On the deal completion, Gati will be in a position to leverage Allcargo's global network to provide time and cost efficient solutions to clients. Currently, Gati reaches out 727 districts reaching out to 19,000 PIN codes in the country.

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"With this deal, we've entered a new era of

consolidation in the domestic express logistics space. This

collaboration also reiterates our commitment to ensure maximum

outreach across untapped markets and provide benchmarked

last-mile delivery solutions," Gati deputy managing director

Bala Aghoramurthy said.

With this acquisition, Allcargo is also entering into a strategic relationship with Japanese freight forwarderKintetsu World Express, which owns 3.99 percent in Gati. Kintetsu already is one of the key customers of Allcargo's wholly-owned subsidiary ECU Worldwide in its LCL business has also acquired APL Logistics.

"This partnership will allow Allcargo and Kintetsu to jointly explore and pursue further collaborations within and

outside the country," Shetty said.

 

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Published December 5th, 2019 at 20:28 IST

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