Friday, December 07, 2018

After initial gusto, Tatas now go slow on Jet deal

Mumbai: Tata Sons chairman N Chandrasekaran, who was the prime driver of a deal to acquire struggling , is believed to have decided to go slow after a few directors in the group holding company expressed reservations at an inconclusive board meeting last Friday.

The board is expected to meet next in the third week of December and these directors have indicated they would like to have more details about the deal by then, according to people close to the development. “You can’t rush into a complex situation that could cost the group up to $2 billion without doing serious homework,” said one of them.

Another person indicated that the board may want a full-blown due diligence report by a reputed firm before taking a call.

While no one in the Tatas is saying the deal is off, there is a sense that Chandrasekaran, who had perhaps hoped for at least an in-principle nod from the board, may now have lost some of his earlier enthusiasm.

There is also a perception that more than the possible pitfalls of such an M&A, it is the fraught history the Tatas have with Jet’s founder Naresh Goyal that may queer the pitch.
Goyal is widely thought to have lobbied behind the scenes to thwart the Tata Group’s attempts to re-enter aviation in alliance with Singapore Airlines (SIA) back in the 1990s and early 2000s. The memory of that still rankles with some old-timers at Bombay House, who aren’t overly keen to “bail out” Goyal.

For Goyal and Jet, a slowdown—or worse, reversal of the acquisition process—would be bad news. The Jet stock, which had soared 40% over the past five days in anticipation of a transaction, fell nearly 7% to close at Rs 323 on Monday. The airline, in which Goyal and Abu Dhabi’s Etihad are the two largest shareholders with 51% and 24% respectively, is staring at financial defaults in the coming days.
06/12/18 Arturo Altman/Fin Examiner