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Delhivery Limited has made a major move towards consolidation in the Indian logistics sector by announcing that it is acquiring a 99.4% stake in Ecom Express Limited on an all-cash consideration up to Rs 1,407 crore ($169.5 million). Additionally, during a board meeting that took place earlier today, the acquisition was approved and both companies have signed a Share Purchase Agreement (SPA) for the acquisition. After the acquisition, Delhivery will acquire Ecom Express and make it a subsidiary.
One week after selling, Ecom Express’s valuation has tumbled, resulting in this deal. In their last private round the company was valued at Rs 7,300 crore. The sale is a distressed one, as the company was acquired for a whopping 78 percent less than the current acquisition amount.
The rise of Valmo, the internal logistics arm of Meesho, was one of the primary reasons that resulted in the decline of Ecom Express. Once, Meesho used to contribute more than 50 percent of Ecom Express’s shipping volumes. In fact, as Meesho began to build its own in-house logistics capabilities via Valmo, volumes of Ecom Express suffered a significant hit in volumes and reliability of revenue stream.
Ecom Express is a full stack, tech driven logistics company incorporated in 2012 with its headquarters being in Gurugram. The company saw revenues of Rs 2,607 crore ($314 mn) for the year period ended March 31, 2024, up from Rs 2,548 crore in FY23. Though financial stress, signs of operational improvement resulted in losses of 40 percent down to Rs 256 crore in FY24.
The idea here is that Delhivity will leverage this acquisition to grow scale, efficiency, and service for their clients. As regards R&D, network automation, electric vehicles, robotics, drones, and further strategic investments, the company has plans to make. It is expected that these initiatives will help these long term technological development as well as cost optimization in its logistics operations.Also, Ecom Express had plans of opening its IPO with a value of $700 million, after which approval to launch the IPO was given by the Securities Expansion Board of India (SEBI). Also, the company remained silent several times about its plans already announced and postponed its IPO plans. Delhivery had earlier accused Ecom Express of showing deceptive sales figures in the draft IPO papers, causing suspicions of transparency and diligence.
The acquisition now moving ahead gives an enormous fillip to the Indian logistics landscape as Delhivery gains market dominance and Ecom Express finds new life under its rival’s wings.
