DHL will spend about €41.5 million to buy out the minority shareholders in its Indian subsidiaryBlue Dart, taking its overall investment in the company to some €168.5 million. The Blue Dart board
has meanwhile approved the DHL offer announced earlier this week.In a statement released by parent Deutsche Post World Net, DHL confirmed that it has offeredto purchase the shares in Blue Dart Express Ltd it does not already own, and will de-list theIndian express company in a further step to strengthen and expand its market leading position inone of the world’s fastest-growing markets.
DHL, via its Singapore subsidiary DHL Express (Singapore) Pte Ltd, currently owns 81.03% ofBlue Dart, the Indian domestic market leader. Minority shareholders, including banks and financialinvestors, own the remaining 18.97%, comprising just over 4.5 million shares. The DHL offer of INR550 per share is thus worth about INR 2,475 million (€41.5 million).
DHL noted that it has invested US$250 million in expanding its business in India in recentyears, including US$163 million (€127 million at current exchange rates) for the acquisition of themajority stake in Blue Dart Express in 2004. The latest transaction means DHL will have investedabout €168.5 million in total to gain 100% ownership of Blue Dart (although this figure does nottake account of exchange variations). DHL and Blue Dart originally signed a sales agreement in2002.
Greg Tanner, a director of DHL Express (Singapore) Pte Ltd and also a director on the boardof Blue Dart, said: “Obtaining full ownership of Blue Dart will enhance our operating flexibilityto meet the business needs of our customers, and streamline our service offering in the region.Given the low liquidity in the stock, we believe that this offer provides an attractive exitopportunity to the public shareholders of Blue Dart.”
DHL said it is prepared to acquire the shares offered to it under a Reverse Book Buildingprocess at INR 550 per share, subject to all requisite shareholder and regulatory approvals beingobtained, including the number of shares required for delisting being offered at this price. Theoffer represents a 10% premium on the average Blue Dart share price over the six months prior tothe August 14 de-listing proposal, and a 16% premium on the closing price of INR 474 on August 11.
“Under current SEBI rules, there is no downside to DHL not proceeding with the Reverse BookBuilding process if the offered price is unacceptable, as we are not under any regulatorycompulsion to either de-list Blue Dart or reduce our shareholding from the current levels. DHL isvery happy to remain as an 81.03% shareholder in the Company if the delisting process is notcompleted,” Tanner added.
Blue Dart said in a statement that its board of directors discussed and recommended theDelisting Proposal at a meeting on August 17. Shareholders could tender their shares to theacquiring company at or above a specially-calculated “floor price” of INR 500. An ExtraordinaryGeneral Meeting of Blue Dart shareholders will be held on September 20 to seek shareholder approvalfor the sale.
DHL added that India is a major engine for its growth in Asia Pacific, and the company iscommitted to provide superior customer service based on a world-class network infrastructure. InIndia, DHL, together with Blue Dart, have over 40,000 customers serviced by 7,400 employees througha combined national network of 14,000 locations, and a fleet of almost 3,000 vehicles.
According to a new CEP-Research “CEP Market Fact Sheet India”, due to be published shortly,DHL and Blue Dart have a clear lead in the fast-growing but fragmented Indian express market, witha combined market share more than three times that of the nearest competitor.
