Allcargo to Finally Acquire Controlling Stake in Gati
Concluding to a long strung discussion, Allcargo Logistics Limited has finally agreed to acquire a controlling stake in express logistics company Gati Limited, worth INR 416 Crores (USD 58.4 million), the two companies said on Thursday.
Pacts are inked, and Allcargo is set to acquire a 19.43 percent stake in Gati from its promoters and through a preferential issue for a total of almost INR 177.9 Crore. Sources say that Allcargo has also made an open offer to Gati's public shareholders to buy another 26 percent for up to INR 238.07 Crore, the companies said in separate statements.
Overall, Allcargo will shell out about Rs 416 crore for a 44-45 percent stake assuming full participation by public shareholders in the open offer.
“The exponential rise in cross-border and domestic e-commerce has opened up new markets for traditional express players such as Gati,” Allcargo chairman- Shashi Kiran Shetty said in a statement.
“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.
According to the deal, Gati's promoters will sell an 8.51 percent stake to Allcargo. Gati is also required to issue preference shares equivalent to a 10.92 percent stake to Allcargo. The share price is INR 75 apiece. On the BSE on Thursday, shares of Gati ended at INR 66 apiece.
Roughly 27 percent premium to its current market capitalisation of Rs 717 crore, this deal will value Gati upwards of INR 910 crore.
Allcargo is not in the express logistics industry currently. With this acquisition, Allcargo intends to enter this segment and become an integrated logistics services provider. Allcargo will take management control of Gati. With private equity firm Acacia Partners as its key public investor, Allcargo will fund this transaction through a mix of internal accruals and debt. The company plans to monetise certain non-core assets, including a land parcel and part of a logistics park.
While Gati deal is Allcargo’s first acquisition in nearly three years, the firm had announced to buy an additional 49 percent stake in South Asia Terminals Pvt. Ltd from Hind Terminals in 2017. Following the transaction, South Asia Terminal became a wholly owned subsidiary of Allcargo.
After this transaction, Allcargo announced the acquisition of a controlling stake in CCI Integrated Logistics Pvt Ltd for an unrevealed amount.
Allcargo’s shares closed at Rs 94.15 apiece on the BSE on Thursday, down 0.21% from the previous close.
Headquartered in Mumbai, Allcargo was founded in 1993 and has been operating container freight stations and inland container depots. The firm also provides multimodal transport solutions. The services offered include ocean, air and land logistics, multi-city consolidation, container freight logistics, warehousing, project cargo movement and cargo consolidation.