Adani drops out of Snowman acquisition as Covid shrinks industry valuation

Snowman Logistics stock is down 35% since deal was announced last December; valuation also hit by Rs 13 cr loss reported by company in first nine months of FY20

Adani Logistics has decided not to go ahead with the acquisition of Snowman Logistics Ltd, a cold- chain company, after valuations in the industry fell sharply due to the ongoing Coronavirus pandemic, sources close to the deal said.

On Monday, Snowman Logistics was trading on the BSE at Rs 27.5 a share with a total market valuation of Rs 459 crore. In December last year, Adani Logistics had announced acquisition of 40 per cent stake in Snowman for Rs 296 crore at a price of Rs 42 a share.

“The stock of Snowman Logistics is down 35 per cent down since the transaction is announced. The Corona pandemic has wiped out its seafood export business which was its mainstay,” said a banker close to the transaction.

Besides, the valuation was also impacted by Rs 13 crore loss reported by the company in the first nine months of the fiscal 2020. In the fiscal 2019, the company had reported a profit of Rs 9 crore, as per the BSE filings.

“Due to the Corona pandemic, the export market will take a lot of time to recover – taking into account the severe restrictions put in place for food exports,” the banker said.

When contacted, an Adani group spokesperson declined to comment. A BSE announcement made by Snowman said the transaction is now off.

Several acquisition transactions have not closed due to ongoing Corona pandemic and its impact on the Indian economy.

Bankers said some of the big ticket acquisition opportunities may see subdued valuations due to Corona pandemic. This includes sale of 50 per cent stake by the Government of India in BPCL, 100 per cent stake sale in Air India and RIL’s stake sale in its refining and petrochem business to Saudi Aramco. The sale of assets by banks via insolvency proceedings will also see a drastic fall.