GoAir, SpiceJet deal enters air pocket

A possible merger between low-cost carriers SpiceJet and Wadia Group-owned GoAir has hit a roadblock after the two sides failed to arrive at a consensus on valuation and branding related issues, two persons familiar with the development, told ET NOW.
SpiceJet and GoAir have an agreement of exclusive negotiations till March 2010 to execute the deal. One of the key stumbling blocks was the amount of unsecured loans on GoAir’s balance sheet, said the first person on conditions of anonymity. The other executive said the two companies were close to signing a memorandum of understanding (MoU) three weeks ago, but could not agree on a share swap ratio to execute the transaction.
A spokeswoman for GoAir said the talks of a proposed merger were baseless. She said, GoAir has categorically stated that the decision taken by the board of the company is not to proceed with any such proposal and focus on its plan of inducting to its existing new fleet of 8 aircraft another 12 aircraft completing its order of 20 Airbus, which the company bought in 2007 for $1.2 billion. Repeated attempts to contact SpiceJet officials and a detailed e-mail query to the company did not elicit any response.
ET NOW has learnt the cashless transaction was to be executed through a share swap agreement between the promoters of GoAir and its shareholders and the promoters of SpiceJet and its shareholders.
17/11/09 Mohit Bhalla & Paramita Chatterjee/Economic Times

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Categories: GoAir Nov 2009, spicejet Nov 2009