MUMBAI: In a significant move within the rapidly evolving logistics sector in India, Delhivery has announced the acquisition of its rival Ecom Express in a substantial all-cash deal valued at ₹1,407 crore. This revelation was made public via a formal filing with the stock exchange on Saturday, marking a pivotal moment in the ongoing consolidation trends in the new-age logistics landscape.

This acquisition arrives at a time when Ecom Express is grappling with considerable challenges, including the suspension of its public listing plans and the unfortunate layoff of several hundred employees earlier this year. Such difficulties have prompted the company to seek a distress sale, as it was previously valued at over $800 million.

Delhivery's acquisition encompasses the purchase of shares that represent at least 99.4% of Ecom Express's issued and paid-up share capital on a fully diluted basis. Analysts are remarking that this acquisition is not merely a financial transaction but also a strategic maneuver to bolster Delhivery's position in the logistics arena.

Market experts have identified the core reason behind Ecom Express's struggles as a shift in the business model of Meesho, one of its key clients, which transitioned to relying more heavily on its in-house logistics service, Valmo. This change reportedly accounted for about 40% to 50% of Ecom Express's business, creating a substantial void that has been challenging to fill. Satish Meena, an advisor at Datum Intelligence, commented on the severity of the situation, stating, “The market is such that it's very difficult to replace even 10% of a company's business.”

By acquiring Ecom Express, Delhivery anticipates enhancing its operational scale, which is critical in the logistics industry where economies of scale directly correlate with efficiency. As Delhivery articulated, “Logistics is a scale-driven business where economies of scale lead to higher efficiencies, enabling players to provide higher quality services at more competitive prices.” This acquisition is expected to further strengthen Delhivery’s value proposition to its clients.

The acquisition process is expected to be completed within approximately six months. Following the transaction, most of Ecom Express’s investors will exit the firm. Notably, Warburg Pincus, British International Investment, and Partners Group collectively hold over 80% of the shareholdings in Ecom Express. The firm had previously filed for an initial public offering (IPO) worth ₹2,600 crore in August 2024, with its last valuation reported at around $878 million, according to data from market research firm Tracxn.

Commenting on the strategic importance of this acquisition, Sahil Barua, the Managing Director and CEO of Delhivery, stated, “The Indian economy requires continuous improvements in cost efficiency, speed, and reach of logistics. We believe this acquisition will enable us to service customers of both companies better through continued bold investments in infrastructure, technology, network, and people.”