Logistics company GatiNSE -9.41 % is in the final round of talks with TVS Logistics to sell a controlling stake in its joint venture subsidiary, Gati-Kintetsu Express, for Rs 1,500-2,000 crore, said two people aware of the development.
Both companies expect to close the deal by November, said one of the persons cited above.
Gati owns 70% in the JV, while its Japanese partner Kintetsu World Express owns the rest, according to Gati’s latest annual report.
In the share swap deal, Gati will likely sell its entire stake in the current joint venture company.
Executives at Gati couldn’t be reached. A spokesperson at TVS Logistics said the company had no comments to make.
The company will likely be merged into TVS Logistics and the combined entity will subsequently be listed at an estimated valuation of Rs 7,300 crore.
Gati’s shareholders will get fresh shares in the new entity, said the persons cited above. Specifics, such as Kintetsu’s holding in the new entity and how much Gati’s shareholders will get, are still being worked out.
The deal is being managed by JM FinancialNSE 2.02 % and Deloitte.
In 2014, Kintetsu bought a 30% stake in Gati-Kintetsu, a subsidiary formed by Gati for the deal, for Rs 270 crore.
Gati transferred its ground express logistics to the JV subsidiary. It now houses the e-commerce and freight forwarding business. Kintetsu also owns 4% in Gati itself.
Gati-KWE is its parent’s biggest moneyspinner. According to the latest annual report, Gati Kintetsu clocked revenue of Rs 1,169.5 crore, up 5% on year. Its Ebitda fell 2% to Rs 74.3 crore and profit after tax fell 1.5% to .`31crore. It accounted for 64% of Gati’s revenue, 48% of its Ebitda, and its PAT came in a tad higher than that of its parent.
The company is undertaking expansions across eight logistics nodes, adding up to 8 lakh square feet. This will result in a two-fold-plus increase in the distribution and warehousing capacities at these points, according to its annual report.
The company in March bought 125 new trucks.
It has also been awarded a new train lease tender by the Indian Railways for the Kolkata-Mumbai-Kolkata rail route, starting with a 700+ tonnes capacity in a round trip.
TVS Logistics is a flagship company of the $7-billion (Rs 51,100 crore) TVS Group. The company, established in 2004, has grown to have offices in 13 countries and operations in 50.