Mumbai: Allcargo Logistics has agreed to acquire 45.4% in Gati for Rs 416 crore, which will mark its foray into the express logistics space. The deal will see founder Mahendra Kumar Agarwal ceding control of Gati, a company which pioneered express distribution in India in 1989.
Shashi Kiran Shetty-led Allcargo will first buy 19.4% in Telangana-based Gati for Rs 178 crore in two steps. It will take 10.9% in Gati for Rs 100 crore by subscribing to new shares and will buy another 8.5% from the promoters for Rs 78 crore.
The Mumbai company will follow up with an open offer to public shareholders for an additional 26%. It will spend Rs 238 crore on the open offer. The open offer price of Rs 75 a share is 14% premium to Gati’s Thursday closing price of Rs 66 on the NSE.
If the open offer, which is managed by Inga Ventures, is fully subscribed, then Shetty will end up with a 45.4% in Gati. Agarwal has been scouting for a strategic partner in Gati for some time and has been in discussions with Allcargo for the same. With revenues of Rs 1,800 crore, Gati reaches 19,000 pincodes in the country.
“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 Logistics.
Agarwal said that Japanese freight forwarder, Kintetsu World Express, which owns nearly 4% in Gati, will remain invested in the separate joint venture it has with the company. Earlier it was reported that the partners were looking to sell the joint venture, which is a 70:30 partnership between Gati and Kintetsu.
