Mallya to pay more for Deccan stake

Mumbai: A comparison between the two major aviation deals — Jet-Sahara and Kingfisher-Deccan — clearly indicates that Vijay Mallya had to spend more in acquiring Deccan, though some analysts feel the price was worth it.
When Mallya acquired a 26 per cent stake in Deccan in May 2007 for Rs 550 crore, he estimated the enterprise value of Deccan Aviation at Rs 2,200 crore. For picking up the 46 per cent stake Mallya has so far invested close to Rs 950 crore. He would have to pump in additional funds in the days ahead.
On the other hand, Jet Airways chairman Naresh Goyal acquired Air Sahara’s 100 per cent stake for Rs 1,450 crore, which was a 34 per cent discount on the original deal of Rs 2,200 crore. Air Sahara, now called JetLite, is back on its feet and poised to turn profitable in the third quarter of 2008, against a net loss of Rs 600 crore last year.
According to analysts this was the only option left before Mallya. “He has deep pockets and has killed many birds with one stone. Firstly, he brought under control a highly discounted Deccan that created a financial mess by doling out cheap tickets. Secondly, while he can utilise Deccan’s rights to fly abroad, he has also prevented a major investor (Anil Ambani) from entering Deccan and continue the cheap fare regime,” said an aviation analyst. “There is no doubt Mallya had to invest heavily, but it was worth investing.”
20/12/07 Lalatendu Mishra/Hindustan Times

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Categories: Kingfisher Dec 2007, Simplifly Deccan Dec 2007