The Competition Commission of India (CCI) has given the green signal to Abu Dhabi-based Etihad Airways to buy 24 per cent stake in the country’s second-largest airlines Jet Airways (India) Ltd for $379 million, providing the final ground clearance to the multi-million dollar deal.
Simultaneously, Etihad will also put $150 million to buy a majority stake in Jet Privilege, the frequent flier programme of the airlines.
The final deal closure is now expected in two weeks.
This deal will enable Etihad to expand its presence into the domestic sector in India through its investment in Jet, along with the proposed co-operation. Conversely, it provides Jet with access to a wider international network.
This will be the first such stake acquisition by a foreign airlines after the Indian government opened up the aviation sector in September last year, allowing foreign carriers to pick up as much as 49 per cent stake in domestic airlines. This was also the first M&A deal in the airline sector which was notified to the CCI for its review.
CCI, whose review was largely to look at its impact on competition in the India-UAE sector, concluded that Jet has only 20 per cent market share in the India-UAE market and Etihad has a further 5 per cent market share. It noted that the aggregation of their market shares does not cause any adverse effect on competition in the relevant market.
Emirates is, by far, the largest player in the sector and also doubles up as the largest international carrier flying to and from India.
In April this year, Naresh Goyal-led Jet Airways inked a deal to sell 24 per cent stake in the country’s second-largest carrier to Etihad Airways through a preferential allotment. As per the terms of the agreement, Etihad will pick up 27.2 million shares at a price of not less than Rs 754.7 a unit.
Jet Airways scrip was up by 2.02 per cent, trading at Rs 337.65 per share at 1.58 pm on Wednesday on BSE.
Cyril Shroff, managing partner of the law firm Amarchand & Mangaldas & Suresh A. Shroff & Co, was the advisor to Etihad on the corporate part of the transaction.
(Edited by Joby Puthuparampil Johnson)