Adani Ports and Special Economic Zone (APSEZ) slipped 8.5 per cent to Rs 324 apiece on the BSE in early morning trade on Monday after Adani Logistics (ALL) on Saturday announced that it would be acquiring Adani Agri Logistics (AALL) from Adani Enterprises (AEL) in an all-cash deal, at a proposed enterprise value of Rs 1,662 crore. The transaction is expected to complete by March 2019. AALL is a wholly owned subsidiary of the Gautam Adani-led APSEZ. AEL is related party falling under joint control i.e. Adani Group.
The company said the strategic move is in line with the Ports operator's vision to lead the integrated logistics services market in India with focus on hinterland logistics.
AALL is Industry leader into modern Agri storage infrastructure and has agreements with Food Corporation of India (FCI) and other State-owned agencies to operate project facilities for warehousing through silos and transportation of the food grains by rails.
The company has 1.58 MMT fully contracted capacity with modern agri infrastructure of 7 trains, 28 storage / handling infrastructure facilities across 10 states. AALL targets to double infrastructure capacity in the next 3 years and tap the new 12.5 MMT infrastructure market as well as opportunities such as conventional storage conversion, among others.
The combined business would also benefit from leveraging significant opportunity for handling multiple commodities and transportation, it added.
“The acquisition will give a kick start to the ambition of growth in logistics business and developing enhanced presence in hinterland logistics. The surplus land at AALL (around 96 acres of 355 acres) is expected to be utilized for logistics parks / warehousing for ALL's logistics business (capex savings of Rs 125-150 crore for ALL). Nevertheless, we find the transaction bit overpriced (will impact near term FCF for APSEZ) and that too with a related party will be bothering point for investors and can weigh on the stock in the near-term,” analysts at Antique Stock Broking said in company update.
At 09:52 am, APSEZ was trading 6 per cent lower at Rs 332 on the BSE. AEL was down 3 per cent at Rs 125, after falling 5 per cent to Rs 123 on the BSE in early morning trade. In comparison, the S&P BSE Sensex was up 0.16 per cent at 35,931 points.