Allcargo Logistics set to acquire up to 46.83% equity stake in Gati

The open offer is expected to be launched in March 2020 and closed by April 2020, the company said on Wednesday post market hours.

Mar 05, 2020 10:03 IST India Infoline News Service

Allcargo Logistics
Allcargo Logistics on Wednesday said that it is set to emerge as a controlling stakeholder in Gati, as it has received SEBI approval on its open offer to acquire ~3.17cr shares or 26% stake in Gati at Rs75 a share. On full acceptance of the open offer, it will take Allcargo's stake in Gati to 46.83%. This will mark the completion of the acquisition process which was initiated on December 5, 2019.

Allcargo Logistics Ltd is currently trading at Rs111.70, up by Rs1.3 or 1.18% from its previous closing of Rs110.40 on the BSE.

Gati Ltd is currently trading at Rs67.60, up by Rs1.05 or 1.58% from its previous closing of Rs66.55 on the BSE.

The open offer is expected to be launched in March 2020 and closed by April 2020, the company said on Wednesday post market hours.

Allcargo has already deposited Rs238cr - equivalent to 100% of the capital required to fund the open offer - into an escrow account set up as per SEBI norms for the open offer transaction.

Preferential allotment and part purchase of promoter shares have also been completed by Allcargo in January 2020.

As part of this process, two directors of Allcargo have been appointed on the Gati Board, Allcargo said in the filing.

"The acquisition is in line with Allcargo Logistics' long-term strategy to strengthen its domestic business. The acquisition will further synergize our efforts to offer end-to-end services to our domestic and international customers. Apart from helping us consolidate our position as the true end-to-end logistics solutions provider, the acquisition will catapult us into the market-leading position in the domestic express logistics segment. It will create a lot of value by leveraging the express logistics business of Gati with our current logistics courier and parcel logistics (CPL) business. We are confident that it will help Allcargo Logistics achieve sustainable growth as a leader in the logistics industry in the short, medium and long run," said Shashi Kiran Shetty, Chairman, Allcargo Logistics.

Depending on the shareholders' response, Allcargo's stake in Gati is likely to go up to 46.83%, with the conclusion of this open offer.

With this acquisition, Allcargo will be able to offer single window solutions through a combination of ECU Worldwide and Gati at a scale that otherwise does not exist in India at present.

Operating an asset-light and hub and spoke model, Gati currently has a presence in 727 districts in India. It has simplified door-to-door express logistics by creating a formidable network serving over 19,000 PIN codes across the country.

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