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Adani Ports and Special Economic Zone td (APSEZ) said on Wednesday it would either scarp the deal or re-negotiate the price to buy a 40.25 per cent stake in Snowman Logistics Ltd for Rs 296 crore.
“We are re-evaluating the deal looking at the current situation and we want to re-assess what is the impact on cold storage business because of COVID-19,” Karan Adani, Chief Executive Officer and director at APSEZ, said in an analysts call.
The deal was announced in December last year after which APSEZ acquired a 26 per cent stake in the cold chain company in March through a mandatory open offer to public shareholders.
Karan said that APSEZ was looking at a mix of both the options- cancellation or re-negotiation on price.
“We are re-looking at the industry itself, whether the cold chain business makes sense in the current environment and if it does make sense, then we would be looking at re-negotiating on the price,” Karan stated.
He added that APSEZ will not go ahead with the deal if it didn’t make sense.
A final call on the deal would be taken between October and December this year.
“We have acquired a 26 per cent stake from the market as part of open offer and we have kept on hold the stake of 40.25 per cent that we have to buy from the promoters,” Karan stated.
APSEZ acquired the stake from Snowman Logistics’ parent company Gateway Distriparks at ₹44 per share.
The acquisition was done through APSEZ’s wholly-owned subsidiary Adani Logistics.
Snowman Logistics runs integrated cold chain logistics and provides warehousing, distribution and value-added services. It operates 31 temperature-controlled warehouses at 15 locations, with 1.04 lakh pallets warehousing capacity and 293 refrigerated vehicles (reefers).
“The acquisition is in line with our strategy and vision to be a leader in providing integrated logistics services in India and moving from port gate to customer gate. Cold chain is key product in customer gate strategy given India’s consumer-driven demand,” Karan said on December 27 while announcing the acquisition.
“We will double the capacity in next five years. With focus on increase in utilisation, higher realisation from product mix and operational efficiencies, this vertical will help further improve returns of logistics business,” he added.
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