DHL Express is looking into a full takeover of Indian subsidiary Blue Dart due to changes in Indianshareholding regulations.
DHL, which has long owned 81 per cent of the Indian company’s shares, has been interested ingaining full control of the country’s leading domestic air express operator in the past but hasbeen put off by the price. It dropped a €41 million move to buy out minority shareholders in 2006for this reason although earlier this year it was reportedly considering a buyout again.
In late July, however, the Securities and Exchange Board of India (SEBI) presented newtakeover rules.The key change is that investors can buy up to 25 per cent of an India company,rather than the previous 15 per cent, before they have to make a mandatory takeover bid. The reformhas been welcomed as a liberalising step that will ease mergers and acquisitions in India’s highlyregulated business environment.
Indian business newspaper Economic Times reported today that DHL Express wants to buy out theminority shareholders and delist the company from the Mumbai Stock Exchange. DHL Express AsiaPacific CEO, Jerry Hsu, told the newspaper: “We are evaluating all options for delisting Blue Dart”and said there is pressure due to (the) SEBI deadline on 75 per cent shareholding norms. “Howeverthe valuation is a hurdle in the delisting process,” Hsu added.
The Blue Dart share price rose 11.46 per cent to Rs 1,759.75 today, including a new all-timehigh of Rs 1,835 during trading. The free float value is now Rs 6,260 million (€96.8 million),according to Stock Exchange data.
A DHL spokesperson told CEP-Research: “DHL is reviewing all business options in line with theIndian government’s regulation of 75 per cent shareholding requirements.”
A full takeover of Blue Dart would give DHL Express clear control over the Indian company andenable closer business cooperation. However, a merger of Blue Dart into DHL Express India appearsunlikely given the size, extensive customer base and brand strength of the Indian express company.
