UB Holdings Acquires 26% In Air Deccan For Rs 550 Crore
Latest update: UB Group CFO Ravi Nedungadi has come on record on the deal. UB Group has indeed acquired 26 per cent stake in India’s largest low cost airline Deccan Aviation. They are paying Rs 550 crore ($138 million), of which Rs 150 crore ($38 million) will be paid now. The rest Rs 400 crore ($100 million) will be paid before June end. UB Group is paying Rs 155 ($3.8) a share. UB will make an open offer to buy an additional 20 per cent.
Nedungadi says that the group is open to co-investing with other investors, so it’s likely the group will rake in investment into a combination of Kingfisher Airline and Air Deccan as a strong business proposition.
Nedungadi says Deccan’s Capt G R Gopinath (pictured, left) will be the chairman of the board, and they will appoint a CEO to run the company.
Update I: (From Capt GR Gopinath’s press conference). Gopinath will be the executive chairman of the company and Vijay Mallya (pictured, right) will be the vice chairman. They will appoint six independent directors. They will have a professional CEO appointed in consultation with both Gopinath and Mallya. The current CFO Ramki Sundaram will be the officiating CEO of the company.
Gopinath said that there five bidders, and the UB offer was “very good”. They decided to go in for UB considering the strategic advantage of joining hands together. Gopinath said the airline will be retained as a low cost carrier.
Air Deccan has 900,000 passengers a month. That’s about 22 per cent marketshare. Gopinath says if that is combined with
(Earlier post): CNBC-TV18 reports that the Air Deccan deal is done. Vijay Mallya’s UB Holdings has acquired a 26 per cent stake in Deccan Aviation, the channel reports quoting sources. The 26 per cent stake will be possibly cost Rs 550 crore to UB, which is paying Rs 150 crore upfront, the channel says. So it’s not Kingfisher Airlines that is making the acquisition, but the group holding company UB Holdings.
There is no official announcement yet, so we will wait for it as the ongoing board meeting of Deccan Aviation concludes in Bangalore in another hour or so.
This is an interesting deal. Kingfisher and Air Deccan will have a combined market share of 32-34 per cent. But what is noteworthy is Capt GR Gopinath of Deccan Aviation had denied a deal with Vijay Mallya a fortnight ago, which led to a public spat between the CEOs. Gopinath even said that Vijay was from Venus and he was from Mars essentially to say that there was an unresolvable cultural mismatch between the two. Mallya then dismissed Gopinath’s opposition saying Deccan Aviation was a public company and anybody could make an offer to buy.
Finally, it seems Mallya is having the last laugh.
