Blue Dart arm sale cleared

Following German logistics major DHL Worldwide’s proposal to acquire 68 per cent equity stake in Blue Dart Express, the company is hiving off its aviation business into a separate entity to avoid violation of foreign equity investment norms.

According to foreign equity participation norms, foreign airlines are not permitted to pick up equity, directly or indirectly, in domestic air transport services.

Courier and express company Blue Dart Express has approved the sale of its 100 per cent subsidiary Blue Dart Aviation to its promoters Tushar Jani and Khushroo Dubash.

The Domestic Air Transport Policy provides that a domestic sector air transport operator can not have agreements such as shareholders agreements with a foreign airline that empowers the foreign airlines or others on their behalf to have effective control in the management of the domestic airline. Blue Dart Aviation is a 100 per cent subsidiary of Blue Dart Express. Hence, if DHL took a stake in the parent company, which is Blue Dart Express, it would have been against the foreign equity participation norms for domestic air transport services. Shares in Blue Dart dropped marginally to close at Rs 315.65 on the Bombay Stock Exchange today as compared to Friday’s close of Rs 316.35

Blue Dart’s acquisition is DHL’s first business acquisition in the Asia Pacific region.

The global logistics heavyweight will acquire the 68 per cent equity stake for Rs 566.50 crore. While 51 per cent stake will be acquired at Rs 350 each from Blue Dart promoters Clyde Cooper, Tushar Jani and Khushroo Dubash, 17 per cent will come from Schroeder Capital Partners.

DHL will subsequently make the mandatory open offer to the public for a further 20 per cent stake (47.5 lakh shares). For this, the company will pay another Rs 166.10 crore. This will bring DHL’s aggregate stake in Blue Dart to 88 per cent for a total tab of Rs 732.6 crore.