Allcargo Logistics is set to acquire a controlling stake in Hyderabad-based courier delivery services firm Gati. The company has received SEBI approval on its open offer to acquire approximately 3.17 crore shares or 26% stake in Gati at Rs 75 a share. This will mark the completion of the acquisition process which was initiated on December 5, 2019.
"On full acceptance of the open offer it will take Allcargo's stake in Gati to 46.83%," Mumbai-based logistics solutions provider said in a filing to the Bombay Stock Exchange.
The open offer is expected to be launched in March 2020 and closed by April 2020, Allcargo said.
Allcargo has already deposited Rs 238 crore - equivalent to 100 per cent 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 has also been completed by Allcargo in January 2020. As part of this process, two directors of Allcargo have been appointed on the Gati Board.
"The acquisition is in line with Allcargo Logistics' long-term strategy to strengthen its domestic business. The acquisition will further synergise 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 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.
By Chitranjan Kumar
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