Gateway Distriparks Ltd, a publicly listed logistics services provider, has begun arbitration proceedings against Adani Ports & Special Economic Zone Ltd after the latter scrapped a deal to acquire its stake in Snowman Logistics Ltd.
In a filing with stock exchanges on Friday, Mumbai-based Gateway Distriparks said it had begun the proceedings against Adani in line with the provisions set out in the original agreement between the two companies.
Earlier this month, Gateway said Adani Ports had not met the conditions necessary for completing the acquisition by the March 31 deadline despite the company showing “good faith” to resolve the matter.
That development came a month after VCCircle reported that Adani Ports was looking to renegotiate certain aspects of the deal to acquire a controlling stake in Bengaluru-based cold-chain logistics company Snowman.
“The agreement is not in force due to repudiation thereof by the acquirer,” Gateway had said at the time. It has not yet elaborated on the conditions Adani Ports didn’t meet.
Earlier this week, however, Adani Ports denied “the correctness and basis” of the statements and claims made by Gateway.
The deal was announced in December last year, with Adani saying that the acquisition would help it expand its own cold-chain logistics and warehousing business. As part of the process, Adani Ports said it would first acquire a 40.25% stake in Snowman from Gateway Distriparks for about Rs 296 crore.
It would then make an open offer to Snowman’s public shareholders to buy as much as 26% more for up to Rs 191 crore. Other investors in Snowman include Washington-based International Finance Corporation and Japan’s Mitsubishi Corporation. It is not clear if these investors sold their stake in the open offer announced by Adani.
Snowman was set up in 1993 and made a strong debut on stock markets in 2014. Its shares touched their peak in 2015, but then fell in subsequent years.
Shares of Snowman were 3.55% down at the time of writing this report on Friday at Rs 25.8 per unit. Shares of Adani Ports were trading 2.73% down at Rs 308.7 apiece while Gateway’s stock was 0.4% up at Rs 77.3 apiece.