Shares of Allcargo Logistics on Friday rallied 9.5% to INR 312 on BSE after the company announced that it will demerge its money-spinning international business ECU Worldwide into a separate listed entity Allcargo ECU.
As per the approved swap ratio, shareholders of Allcargo Gati will get 63 shares in the resulting Allcargo Logistics entity after the demerger for every 10 shares held in Allcargo Gati.
Shareholders of Allcargo will get 1:1 shares in the demerged Allcargo ECU Limited and continue to hold their shares in Allcargo Logistics, which will now be the resulting entity holding Express and Contract Logistics business directly. This takes into account the 3:1 bonus shares approved by shareholders for Allcargo Logistics recently.
Shares of Allcargo Gati were trading 2% higher on the BSE in the morning session.
According to the proposed plan, the International Supply Chain (ISC) business will be demerged into a separate entity: Allcargo ECU Limited. This would include the India part of International Supply Chain business along with the international subsidiaries held under the ECU Worldwide NV.
“With the merger of Allcargo Supply Chain and Gati Express business, the scheme will create a strong P&L, balance sheet and cash flows to drive synergistic growth & expansion in the fast-growing domestic logistics market to create an unmatched powerhouse in the domestic supply chain business,” said Allcargo Group chairman Shashi Kiran Shetty.
The scheme is expected to be implemented in 10-12 months, accounting for regulatory filings, stock exchange approval, shareholder approval, NCLT approval and ROC filings.
Allcargo Group will eventually have four listed strategic business undertakings. Allcargo ECU Limited and Allcargo Logistics post demerger of ISC business, alongside Allcargo Terminals Limited and TransIndia Real Estate Limited, which were created through an earlier scheme of arrangement.
The company said express business and contract logistics business would come under the resulting entity Allcargo Logistics which will benefit from combined synergies and the shareholders of Allcargo and Allcargo Gati will get direct shareholding eliminating inefficient complex corporate structure.
