In a major consolidation move in India's logistics sector, Delhivery Ltd. announced on Saturday that it will acquire its competitor, Ecom Express Limited, for a consideration not exceeding ₹1,407 crore. The acquisition is expected to be completed within six months from the date of signing the Share Purchase Agreement (SPA), subject to potential extensions by mutual agreement between the involved parties.
In a regulatory filing, Delhivery confirmed that its board of directors has approved the execution of the SPA between Delhivery, Ecom Express, and the shareholders of Ecom Express. Once the transaction is finalized, Ecom Express will become a subsidiary of Delhivery, further enhancing the acquiring company's service capabilities and market share.
Sahil Barua, Managing Director and CEO of Delhivery, expressed confidence in the strategic benefits of the acquisition. He stated, “We believe this acquisition will enable us to serve the customers of both companies more effectively. With sustained investments in technology, infrastructure, network, and people, this merger will significantly strengthen our operational foundation.”
He also praised Ecom Express for building a robust logistics network and team, noting that this would be seamlessly integrated into Delhivery’s systems.
K. Satyanarayana, Founder of Ecom Express, also expressed optimism about the deal. He said, “Delhivery’s scale and capabilities will unlock the next phase of growth for Ecom Express. The synergies arising from this acquisition will deliver substantial benefits to businesses across India and contribute to the broader logistics ecosystem.”
However, the acquisition follows a previous dispute between the two companies. In September of the previous year, Delhivery had accused Ecom Express of misrepresenting certain operational metrics, such as shipment volumes, profitability, and capacity details, in its draft red herring prospectus (DRHP).
Delhivery clarified its stance on shipment counting practices, stating that it considers a shipment as one unit regardless of whether it is delivered or returned to origin. In contrast, Ecom Express counts both the forward and return journey as two separate shipments, as they are billed separately.
Highlighting this discrepancy, Delhivery estimated that when adjusted for the industry average of 14-18% returns, Ecom Express's actual shipment volume would be closer to 450 million.
The company also emphasized the need to account for differences in shipment profiles when comparing performance metrics. Delhivery reported that its average shipment weight is nearly double that of Ecom Express due to a more diversified client base. It added that while Ecom Express derives 52% of its revenue from its top customers, Delhivery’s customer concentration is only 16%.
With this strategic acquisition, Delhivery is poised to enhance its leadership position in India’s competitive logistics landscape, while integrating the strengths of Ecom Express into its operational framework.