Tuesday, June 20, 2006

Jet-Sahara deal cancelled?

It is not official yet but Indian civil aviation's biggest takeover deal may not happen after all. Investment banking sources say the proposed acquisition of Air Sahara by Jet Airways for $500 million (Rs 2,300 crore) could be off.
Aviation industry sources said Jet Airways is rethinking the deal after its due-diligence revealed some startling facts. Jet, which was allowed to do the due-diligence only after the MoU was signed, found that Air Sahara had been posting mounting losses.

Jet and Sahara deny that
marriage is off

New Delhi:
Both Jet Airways and Air

Sahara on Monday played down the
speculation about their $500-million
marriage in the skies hitting a
rough patch.The speculation was
sparked off by Jet Airways promoter
Naresh Goyal not yet getting the
security clearance from the Union
home ministry - a pre-requisite for
him to be on the Air Sahara board.
The deadline for the Jet-Sahara share
purchase agreement and the escrow
account created for the deal ends in
three days, on June 22.Jet Airways
spokesperson refused to comment on
market rumours about the deal being
called off.
20/06/06 Times of India
The sources said Air Sahara had made losses to the tune of Rs 226 crore till January 18. Between January and March, it suffered a loss of around Rs 160 crore.
But even if it cancels the deal, Jet stands to lose money -- Rs 100 crore already paid to Air Sahara. The amount, given upfront after signing the initial agreement, was paid without any guarantees.
Also, Jet paid an advance of Rs 500 crore against guarantees in March. Sahara will have to return this amount if the deal falls.
Sabarinath M and Ranju Sarkar/Hindustan Times