Tuesday, July 16, 2013

Jet-Etihad deal may skid on valuation runway

Mumbai/New Delhi: Etihad Airways, which had earlier agreed to buy a 24 per cent stake in Jet Airways, has sought a reduction in the premium it was willing to pay on the shares of the Indian carrier. This is seen as a condition put by the Abu Dhabi-based airline for extending the agreement-closure deadline, which ends on July 31.
A top source associated with the deal said: “The agreement has a clause that deal can be terminated if requisite permissions are not received before July 31. However, the discussions are now on to renegotiate the terms of the deal at a price lower than that agreed upon earlier.” The two airlines are now discussing changes in the investor agreement. These include a possible revision in purchase price.
Under the agreement signed by the airlines on April 24, Jet Airways had agreed to issue 24 per cent equity to Etihad by way of preference shares in a deal valued at about Rs 2,060 crore. Etihad had agreed to a pay a premium of 31 per cent on Jet’s stock price (Rs 573 at that time). The Jet stock on Tuesday fell four per cent from its previous close on BSE to end the day at Rs 403.45.
17/07/13 Aneesh Phadnis & Sounak Mitra/Business Standard
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