VCCircle

Unconfirmed reports suggest that Vijay Mallya's Kingfisher Airlines and Deccan Aviation have reached an agreement according to which the former will pick up a 26 per cent stake in India's largest low cost airline. TV channels reported that a board meeting of Deccan Aviation has been convened at today 5 pm to consider the proposal. A decision is awaited today.

If the deal goes through, the current managing director and founder of Deccan Aviation Capt GR Gopinath could be elevated as the chairman of the company. If Mallya acquires 26 per cent, he will have to go in for an open offer which will give him possibly another 20 per cent stake. With 46 per cent stake Kingfisher Airline will have a majority control over the company. Kingfisher will appoint a full-time professional CEO to run the company.

Currently Capt Gopinath owns 10.92 per cent stake in the company, while others like Ladhani family 11.15 per cent, Capt K J Samuel 8.33 per cent and others including private equity investors own 31.89 per cent.

I am sure the deal is a forced one on Capt Gopinath since he had vehemently denied a deal with Mallya. He had cited cultural differences as a major issue between Kingfisher and Air Deccan. Watch this space.

Updated: Deccan Aviation board is also said to be considering an offer from Anil Ambani's Reliance ADA Group. ADAG is believed to have offered Rs 135 a share, while KIngfisher Airlines have made a higher Rs 155 a share offer. The board is mulling on both offers, and there is also a line of thinking that ADAG may be a better bet since they are cash rich and can infuse more capital at a later date since Air Deccan is expected to burn at least Rs 600 crore in the near future. ADAG, however, has denied making any offer. What will also go against Kingfisher is the cultural mismatch. Mallya is after all not the common man's businessman, while Gopinath claims to be one.