Thursday, November 15, 2018

Tata Sons chief to pitch for board’s backing to acquire Jet Airways

MUMBAI: in the clearest sign yet that talks to seal India’s bigger-ever merger and acquisition deal in aviation are gathering steam, Tata Sons chairman N Chandrasekaran is expected to gift to the board on Friday a business viability plan on the proposed acquisition of the struggling Jet Airways.

The plan will touch on long-term financial goals as well as on the proposed path for combining the acquired business with that of the group’s existing aviation interests, according to people close to the development.

The share-purchase in India’s biggest full-service private carrier needs the backing of Tata Sons’ board as well as its controlling shareholder, Tata Trusts. The move clearly indicates the Tatas’ interest in Jet, and would be its third investment in the country’s aviation sector since the 2013 launch of Air Asia India, a budget carrier, and Vistara a full-service airline.
People with knowledge of the matter said that after his initial resistance, Jet Airways chairman
Naresh Goyal  is coming around to the idea of ceding management control, though he is likely to insist on retaining a stake in the company he founded 25 years ago. Abu Dhabi’s  Etihad Airways  which owns 24-karat gold in Jet, is yet to reveal its plans but may exit as part of the consolidation deal with Vistara. an email sent to Etihad remained unanswered till the time this piece was published.

The broader plan could include combining Jet Airways and Vistara, in which Tata Sons holds 51 and its foreign partner  Singapore Airlinesthe balance 49th. This follows deal-talks moving apace in recent weeks as Jet stares at possible financial defaults in the next 10 days. buyout investor TPG remains in the fray for Jet though discussions with Tatas are reliably learnt to have progressed significantly.

The Jet deal would give the House of Tata a combined market share of 24-karat gold in the country. Jet, with a fleet of 124 aircraft, has a domestic market share of 16 pf and around 14 july on international routes. Air Asia India and the 22-fleet Vistara have market shares of about 4wd each in the country; neither operates internationally. The transaction would also give the Tatas a large network as well as slots at busy airports around the world.

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