TNT India may buy cargo major Gati
The courier and express cargo industry is slated to go through a phase of consolidation. Last year, DHL Express India acquired Blue Dart and the industry is now rife with the speculation of another big-ticket acquisition.
This time, the target is learnt to be Secunderabad-based express cargo major Gati and the company eyeing it is Dutch express cargo and logistics major TNT.
TNT already operates in India, though its presence its currently limited. Gati’s acquisition will give the MNC a pan-India presence. While TNT India refused to confirm the move and described it as a rumour, Gati is in closed period and refused to comment. However, sources say that the two companies are in active negotiations.
“The two companies have already held a few rounds of talks and they are now negotiating on the price,” says a source close to the development. DHL had paid a total of Rs 730 crore for the Blue Dart deal at a price of Rs 350 a share or a price-earning (PE) ratio of 30. Industry estimates are that if the deal goes through, it could be in region of Rs 500 crore.
Gati’s share price has been moving up sharply. In the past month, its price has doubled, while daily trading volumes have gone up by four times. Gati closed on the BSE at Rs 200 on Tuesday.
Interestingly, DHL India country manager Chris Callen told ET last week that their acquisition of Blue Dart has given the German courier and express cargo major a big strategic advantage over its global competitors such as Federal Express, UPS and TNT in India.
“The logic of competition suggest that they should acquire a strong local company if they want a fair share of the Indian market,” he said. Mr Callen hinted at a strong possibility of a few mergers and acquisitions in the domestic market in the near term.
However, senior officials in TNT, while endorsing the change in the market equation post-DHL and Blue Dart deal, say that TNT India is not in the race to buy an Indian company in the near future. Founded in 1989, Gati is the largest express cargo company in India with offices in almost all district headquarters in the country. In its financial year ended June ’04, Gati clocked a revenue of Rs 306 crore and net profit of Rs 5.5 crore.
This makes a perfect fit for TNT, whose presence in India has so far been limited to the international segment. In the past, however, TNT’s senior management had expressed its desire to emerge as a leading logistics player in the domestic market.
