Allcargo Logistics on Thursday said it is acquiring a controlling stake in express logistics company Gati.
The all-cash deal will see the company eventually acquiring about 45% in Gati through a direct purchase of the promoters’ stake and a subsequent open offer. It values the company at about Rs 1,000 crore.
ET reported the deal on December 4, 2019, a day before its announcement.
“The exponential rise in crossborder and domestic ecommerce 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 Allcargo Logistics chairman Shashi Kiran Shetty.
The express logistics industry is expected to reach Rs 48,000 crore ($7 billion) by 2023, according to a study led by Deloitte in 2018. This growth will primarily be driven by domestic consumption, shift from unorganised to organised trade, ecommerce (domestic and cross-border) and significant demand from small and medium B2B segments.
Allcargo is funding this deal through a mix of internal accruals and debt. Internal accrual is through monetisation of non-core assets including land parcels.