Bangalore: The acquisition of three Hong Kong-based firms by Aqua Logistics Ltd is being challenged by Bangalore-based Siesta Logistics Corp. Ltd, which said it had signed a “transition agreement” with the companies on an exclusive basis on 25 February.
Siesta Logistics, which said it had hired Ernst and Young Pvt. Ltd to conduct due diligence prior to acquisition, plans to seek legal remedy, it said.
Aqua Logistics told the stock exchanges on 29 March that it had entered into an agreement on 26 March in Hong Kong to acquire three logistics companies—CIT Logistics Ltd, TAG Logistics Ltd and AGI Logistics Ltd— through its wholly owned subsidiary Aqua Logistics HK Pvt. Ltd. As per the terms of the deal, Aqua Logistics will initially acquire a 60% stake in the three for a total consideration of $7.09 million (around Rs32 crore).
Aqua plans to acquire an additional 15% stake over a five-year period, in tranches, subject to certain terms and conditions and as per business performance targets to be achieved by the Hong Kong companies.
Aqua Logistics said it has no knowledge of the Siesta Logistics agreement.
“I am hearing this name (Siesta Logistics) for the first time today. Somebody called me up today to say that they had some agreement with the companies we acquired,” Mohammad Sabir Sayad, Aqua Logistics vice-chairman and wholetime director, told Mint. “They were supposed to send me the said agreements by email. But they have not done it so far. I have not really given a thought on what should be done at this point of time.”
Aqua Logistics was listed on the bourses recently.
“We are subject to disclosures and other regulations. Therefore, we will not violate norms. Why would a target company sign two different agreements? In fact, we had started talking to these companies nine months (ago),” Sayad said. “The target companies have also clarified that they do not have any binding agreements with any parties. Also, we had mentioned in our public issue that we will using the proceeds to acquire overseas companies.”
Ashok Chattaraj, chairman and managing director of Siesta Group, told Mint that his company was in talks with the three companies and a couple more.
“After signing a transition agreement on 25 February with these three logistics companies, Ernst and Young was doing due diligence during 9-28 March,” Chattaraj said. “I took up the issue late as Alfred Lam, the consultant of these three companies, told me that he was coming to India to discuss the issue.”
Chattaraj said he can prove that Siesta was in talks with the Hong Kong companies to buy them, but for less than what Aqua is paying.
“I spoke to some representative of Aqua,” he said. “But I wanted to take it up with Lam.”
Siesta Logistics is the arm of Siesta Hospitality Services Ltd, in which venture capital firm Matrix Partners India had invested $10 million in October 2009.
Aqua Logistics dropped by a marginal 0.04% to close at Rs271.05 on the Bombay Stock Exchange on Thursday when the benchmark index rose 0.94%.