Private equity-backed integrated logistics solutions provider Allcargo Logistics Ltd Thursday said it has signed an agreement to acquire a controlling stake in Gati Ltd for about $58 million (Rs416 crore).
As part of the deal, Allcargo will acquire up to 10.3 million shares, equating to 19.43 per cent stake, in Gati from its promoters and through a preferential issue for a total of almost Rs 177.9 crore. It has also made an open offer to acquire additional 26 per cent from public shareholders for about Rs 238 crore, Allcargo said in a regulatory filing.
If the open offer is fully subscribed, private equity firm Acacia Partners-backed Allcargo will end up holding 44-45 per cent stake in Gati for a total consideration of Rs 416 crore. Allcargo will fund the transaction through a mix of internal accruals and debt.
Upon completion of the proposed preferential allotment, the company will be classified as promoter of the Gati along with the existing promoters of Gati, the filing added.
“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,” said Shashi Kiran Shetty, chairman, Allcargo.
Incorporated in 1995, Gati is engaged in the business of express distribution (surface, air and rail parcel), supply chain management solutions, value-added transportation solutions, e-commerce, logistics, cold chain logistics, freight forwarding segments, operation of fuel stations, among others.
The company has a net worth of Rs 767.5 crore and turnover of Rs 516 crore as on March 31, 2019 on a standalone basis.
Mumbai-based Allcargo operates container freight stations and inland container depots and provides multimodal transport solutions. With this acquisition, Allcargo is also entering into a strategic relationship with Japanese freight forwarder Kintetsu World Express, which owns 3.99 percent in Gati. This partnership will allow Allcargo and KWE to jointly explore and pursue further collaborations within and outside India.
Gati is Allcargo’s second acquisition in less than three years. In March 2017, it had acquired a 49 per cent stake in its arm South Asia Terminals Private Ltd from Hind Terminals. After the transaction, South Asia Terminal became a wholly owned subsidiary of Allcargo.