Allcargo Logistics Approves Acquisition Of 19.43% Stake In Gati

Allcargo Logistics Ltd.'s board has approved acquisition of 19.43 percent stake in Gati Ltd., effectively taking over management control of the Hyderabad-based supply chain solutions company.

Allcargo Logistics will acquire the stake for Rs 177.9 crore from promoters and via preferential issue of equity shares, according to its exchange filing. The container freight stations operator also announced an open offer for acquisition of up to 3.17 crore shares, which represent 26 percent of the paid-up voting share capital, to comply with the Securities and Exchange Board of India's norms, the filing said.

The acquisition, expected to be completed by March 30 next year, is subject to approval from shareholders and other authorities, it said.

The Consideration

A share purchase agreement was entered between Allcargo Logistics and existing members of promoter group of Gati, which also includes TCI Finance Ltd., to acquire up to 1.03 crore shares or 8.51 percent stake at Rs 75 apiece, a premium of 13.6 percent to the closing prices as on Dec. 5, according to the exchange filing.

This includes 9.67 lakh shares of Gati, which pursuant to order of Kolkata High Court are to be restored to TCI Finance and would for part of the agreement, if restored prior to the completion date, the filing said. TCI Finance, in another exchange filing, said that it will sell 4.75 percent stake in Gati for a consideration of Rs 38.6 crore.

A share subscription agreement was also entered between the parties for subscribing preferential issue of 1.33 crore shares or 10.92 percent stake at Rs 75 apiece, the logistics company said, adding after the completion of the proposed preferential allotment, Allcargo Logistics will be classified as the promoter of Gati along with its existing promoters. Allcargo Logistics' board also approved raising Rs 195 crore via non-convertible debentures.

Existing promoters of Gati include Mahendra Kumar Agarwal, Mahendra Investment Advisors and TCI Finance. “This alliance strengthens GATI with more management bandwidth, operational synergies, cross-selling opportunities, and financial strength,” Mahendra Agarwal, founder and CEO of Gati, said

Shares of Gati rose 1.15 percent, while those of Allcargo Logistics fell 0.05 percent today, as per Bloomberg data. Bloomberg had first reported about the deal in September this year.