Adani Ports & SEZ Ltd said on Friday it has agreed to acquire a controlling stake in Snowman Logistics Ltd to expand its cold-chain logistics and warehousing business.
Adani Ports, through unit Adani Logistics Ltd, will first acquire a 40.25% stake in Mumbai-listed Snowman from Gateway Distriparks Ltd for about Rs 296 crore. It will then make an open offer to Snowman’s public shareholders to buy as much as 26% more for up to Rs 191 crore, Adani Ports said in a statement.
Adani Ports said it is acquiring Snowman shares at Rs 44 apiece. That’s a 3.2% premium to Snowman’s market price on Friday and a 12% premium to the 60-day volume weighted average price.
The acquisition is subject to customary conditions precedent and is likely to close by March 31, 2020.
“The acquisition is in line with our strategy and vision to be a leader in providing integrated logistics services in India and moving from port gate to customer gate,” said Karan Adani, CEO at Adani Ports.
“Cold chain is [a] key product in [the] customer gate strategy given India’s consumer-driven demand. We will double the capacity in the next five years. With focus on increase in utilization, higher realization from product mix and operational efficiencies, this vertical will help further improve returns of logistics business,” he said.
Adani Ports and Adani Logistics are part of a conglomerate led by billionaire Gautam Adani. Adani Ports is the largest port operator in India and runs 10 ports and terminals in India. Adani Logistics operates five logistics parks and has warehousing space of 400,000 sq ft. It aims to have at least 15 logistics parks and 5 million sq ft of warehouse space by 2025.
Snowman Logistics provides integrated cold-chain logistics services including warehousing and distribution. The company has a pan-India presence with 31 temperature-controlled warehouses at 15 locations. Its clients include meat and seafood suppliers, quick-service restaurants and drugmakers.
Snowman reported revenue of Rs 233 crore for 2018-19, up from Rs 194 crore the year before.
The logistics company was set up in 1993 and made a strong debut on stock markets in 2014. Its shares touched their peak in 2015, but fell in subsequent years.
The company counts International Finance Corporation, the private-sector arm of the World Bank, as a large institutional investor with a stake of 6.77% at the end of September, stock-exchange data show. Japan’s Mitsubishi Corp and Mitsubishi Logistics Corp own 9.36% and 2.17%, respectively.
