Kalanithi's Rs 700-cr offer not too hot for SpiceJet owners

Mumbai: Kalanithi Maran, media baron and promoter of Sun TV, and the promoters of SpiceJet are sparring over the price being offered for a majority stake in the budget carrier, with Mr Maran’s proposal of Rs 700 crore for a 51% stake finding few takers among the airline’s shareholders.
Mr Maran, whose interests have now spread from media to aviation, has completed due diligence and is believed to have made an offer of Rs 700 crore, or Rs 55 per share. This is not acceptable to the SpiceJet shareholders, as the offer is at a discount to the ruling market price of the stock.
The SpiceJet stock fell marginally to Rs 57.55 on Monday. At current market price, SpiceJet is valued at about Rs 1,388 crore.
“There are differences on the valuation. If that is over, a deal may be announced in a fortnight,” said an investment banker requesting anonymity. Kenya-based Kansagra family is the promoter of SpiceJet with a 13% stake. SpiceJet director Ajay Singh holds 5%.
The deal, if it goes through, will be a combination of share sale by existing shareholders and issue of new shares to Mr Maran, who has been looking for an opportunity to enter the aviation industry. He held discussions to buy Star Aviation, an yet-to-be-launched regional airline in South India.
Financial services group Religare is also in the race, but yet to do the due diligence, said a person having direct knowledge of the development. The Anil Ambani Group had showed some initial interest.
Advisory firm Ernst & Young (E&Y) is doing the financial due diligence for SpiceJet and law firm Amarchand & Mangaldas & Suresh A Shroff & Co is advising Mr Maran on legal issues.
30/03/10 Manisha Singhal/Economic Times

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Categories: New Mar 2010, spicejet Mar 2010