A Mumbai based- Integrated logistics solution provider Allcargo Logistics has announced the acquisition of majority stakes in Gati Ltd for Rs 416 crore.
As a part of the deal, Allcargo which provides the services, as multimodal transport operations. Container freight station operations, warehousing, distribution, contract logistics, and logistics parks. Will allow the company to enter in Gati’s express logistics space.
According to the company statement, “Allcargo came into the agreement with Gati’s promoter group to acquire up to 10.3 million shares at Rs75 per piece. Allcargo will also subscribe to a special issue of 13.3 million equity share of Gati at Rs75 per piece.”
“With the closure of the two agreements. Allcargo will spend Rs178 crore to hold a 19.43% stake in Gati, and will also be classified as a promoter of Gati, along with the existing promoters and will have the right to nominate the directors on the board,” the statement added.
Adding to it, “Allcargo will look to acquire an additional 26% stake form Gati’s public shareholders through an open offer at the price of Rs 75 per piece.” “If the company able manage to acquire the 26% in Gati. The company will end-up by spending additional Rs 238 crore, and will take its total acquisition spend to Rs 416 crore.”
The deal is expected to close by 30 march 2020.
Speaking on the acquisition, Shashi Kiran Shetty, Chairman, Allcargo, said: “The exponential rise in cross-border and domestic e-commerce has opened up new markets for traditional express players such as Gati.”
“With Allcargo’s existing strength in the ocean transportation business and Gati’s expertise in land and air transportation, we are now in a unique position to offer our customers a suite of truly multimodal solutions,” he added.
Commenting more on the deal, Gati’s, Managing director, Bala Aghoramurthy, said: “With this strategic deal with Allcargo Logistics, we have entered a new era of consolidation. And also reiterates our commitment to ensure maximum outreach across untapped markets and provide benchmarked last-mile delivery solutions to our clients.”
According to the statement, “Allcargo will fund the deal through a mix of debt and monetization of non-core assets.”