Adani Logistic, the subsidiary of Adani Ports & SEZ, will benefit from the acquisition of Snowman Logistics in more ways than the street expectations.
While the deal is expected to be net accretive, it would also enable the Adani Group company to consolidate its position in the logistic sector which is likely to witness exponential growth in the future.
While the buying of Snowman marks the entry of Adani group into cold chain business, it will provide incremental gains in revenues as well as at the operating level.
Snowman’s acquisition is set to add 16% to Adani Logistics revenues and 14% to operating profit or Ebitda which translates to an EV/Ebitda of 11.8x FY21, a premium to its own, due to high growth potential.
Adani Logistics recently announced its decision to acquire 6.7 crore shares of Snowman at Rs 44 per share (3.2% premium) valuing deal at Rs 296 crore.
Gateway Distriparks has offered to sell its entire stake of 40.25% stake in Snowman Logistics to Adani Logistics.
The decision was taken to sell the loss-making firm to raise funds and reduce debt worth Rs 600 crore.
Gateway Distriparks had recently bought back Blackstone’s stake in Gateway Rail Freight for Rs 850 crore, ending an arbitration proceeding with the private equity investor regarding the terms of exit.
Snowman Logistics is engaged in cold chain logistics with a pan-India presence at 31 locations in 15 cities.
It is a market leader in cold chain logistics with over 30% of capacity amongst integrated organised cold chain service providers in India.
Adani Logistics, a 100 subsidiary of listed company Adani Ports & SEZ, recently acquired Adani Agri Logistics from Adani Enterprises in an all-cash deal at a proposed enterprise value of Rs 1,662 crore.
Adani Logistics will make mandatory open offer at Rs 44 per share for a maximum of 26% stake aggregating to Rs 191 crore.
Snowman’s acquisition gives Adani Logistics platform to double its capacity in the next five years.
The buyout is in line with the firm’s strategy to move from port gate to customer gate.
Net net we expect shareholders of snowcem logistics to benefit going ahead as Adani Group is more aggressive and has the necessary cash flow to fund this business and increase its footprint here
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