Saturday, November 17, 2018

The many hurdles for Tatas in a Jet Airways deal

Bengaluru: Tata Sons may have to shell out over $1 billion if it were to buy out a majority stake in Jet Airways and invest an additional ₹1,000 crore immediately to stabilise the airline’s operations.
The parent of the Tata Group will also have a major task on hand to convince the joint venture partner, Singapore Airlines to participate in the deal if Jet Airways were to be merged with Vistara.
Another issue which is bound to come up during the merger talks would be the 24 per cent stake of Jet held by Etihad. The airline bought the stake for a little over ₹2,000 crore and with the current market value at ₹3,940 crore, the value of its investment has gone down further. It is unlikely that Singapore Airlines would want Etihad as one of the prominent shareholders even with a reduced stake.
Also, any additional stake over and above 26 per cent will trigger off an open offer, industry sources said. The open offer price should be attractive enough for shareholders to subscribe to it.
Late on Friday, Tata Sons released a statement that the talks with Jet Airways was at a preliminary stage and no proposals had been made.
16/11/18 K Giriprakash/Business Line