Supply Chain Council of European Union |

Allcargo Logistics buys controlling stake in Gati

MUMBAI: 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 organisedtrade, ecommerce (domestic and crossborder) and significant demand from small and medium B2B segment.

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.

Allcargo had been in advanced talks for the transactions in August last year, but withdrew subsequently. ET reported the first round of talks on August 15, 2018. Talks were renewed earlier this year. The final agreement between the parties was held up by Kintetsu World Express, a Japanese freight forwarder that owned 3.99% stake in Gati as of September end.

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