Delhivery seeks regulator approval to acquire 99.4% rival stake

Delhivery has sought approval from the Competition Commission of India (CCI) to acquire a 99.4% stake in Ecom Express for 1,407 crore rupee (US$164.8 million).

The companies said in their filing that the deal won’t significantly affect competition in logistics, despite overlaps in services like express parcel delivery, warehousing, and intralogistics automation.

The transaction falls under Section 5(a) of the Competition Act, 2002, which regulates M&As based on asset and turnover thresholds.

Delhivery said the deal supports better cost efficiency and logistics services in India.

The company announced the acquisition earlier this month, valuing Ecom Express at 80% below its 7,300 crore rupee (US$855.03 million) valuation in June 2024.

🔗 Source: Inc42

🧠 Food for thought

1️⃣ Indian e-commerce logistics market consolidation follows global growth patterns

The Delhivery-Ecom Express deal reflects a natural consolidation phase in India’s rapidly expanding logistics sector.

India’s overall logistics market is projected to reach $484.43 billion by 2029, growing at an annual rate of 8.8%, creating pressure for operational efficiency and scale 1.

This growth is primarily fueled by e-commerce expansion, with daily shipments expected to increase from 8 million to 25 million by 2025, a 40% compound annual growth rate 2.

Before the acquisition, the market structure already showed significant concentration, with Delhivery handling approximately 2 million shipments daily while Ecom Express managed about 1 million 2.

The average cost per shipment has already decreased from 100 rupees to about 75 rupees due to volume efficiencies, illustrating how scale directly impacts profitability in this sector 2.

2️⃣ Network infrastructure value persists despite operational challenges

Despite Ecom Express’ operational difficulties, its extensive infrastructure remained valuable enough to command a significant acquisition price.

The company operates approximately 3,000 last-mile hubs covering over 25,000 PIN codes, creating a nationwide delivery network that would be time-consuming and expensive to build from scratch 2.