Delhivery to acquire Ecom Express for Rs 1,407 crore

Delhivery

Logistics firm Delhivery on Saturday announced that it will acquire its rival, Ecom Express Limited, for an amount not exceeding Rs 1,407 Crore.

"The Board has approved the execution of Share Purchase Agreement amongst the Company, the Target Company (Ecom Express) and their shareholders and execution of other necessary documents regarding the aforementioned acquisition (“Transaction Documents”). Post completion of such acquisition, Ecom will become a subsidiary of the Company," Delhivery said in a regulatory filing.

Said Sahil Barua, MD and CEO, Delhivery: “We believe this acquisition will enable us to service
customers of both companies better, through continued bold investments in infrastructure, technology, network and people. The founders and management of Ecom Express have established a high quality network and team, creating a strong foundation to integrate into Delhivery’s operations.”

According to K. Satyanarayana, founder of Ecom Express, Delhivery's scale advantages will help the firm unlock its next phase of growth.

"With this acquisition and its inherent synergies, businesses across India as well as the logistics industry itself will benefit immensely through the combination of two like-minded
players," he said.

Delhivery further mentioned that acquisition will be completed Within 6 months from the date of execution of Share Purchase Agreement (“SPA”) unless extended by the parties to the SPA.

The acquisition comes after Delhivery alleged that Ecom Express has misrepresented numbers with regards to the two companies’ shipment volumes, profitability and capacity metrics in its draft red herring prospectus (DRHP) in September last year.

Delhivery further explained that it counts a shipment, even if it is not delivered to the destination and returned to origin as a single shipment. But, Ecom Express counts it as two shipments as the to and fro transportation are billed separately.

Additionally, it alleged that when accounted for an industry average of 14-18 percent of shipments being returned to origin, the adjusted shipment number for Ecom Express would be in the vicinity of 450 million.

It further said that it is incorrect to compare any two shipments of the two companies as their customer mix and hence their average weight of shipments are different.

“Per shipment metrics hugely vary depending on shipment profile – weight profile for Delhivery and peer will be significantly different due to different client mix. Peer has Top customer concentration of 52% of revenue (vs. 16% for Delhivery) resulting in Delhivery’s average weight per parcel being ~2x of the peer,” it said in a regulatory filing.