Kalanithi Maran, founder of Sun TV Networks, has found his place in the SpiceJet cockpit.

India’s second largest low-fare airline SpiceJet Ltd today told the stock exchanges that Sun TV Networks honcho Kalanithi Maran and his entity Kal Airways Pvt. Ltd will acquire the shares held by Royal Holdings Services Ltd. and WL Ross in the firm.

The media moghul, who runs nearly 20 TV channels in South India, will pay a sum of Rs 740 crore for a 37.73% stake held by the promoter family Kansagra and WL Ross at a share price of Rs 47.25 per share. He is also making an open offer for another 20% stake at Rs 57.76 per share which would involve an outlay of Rs 480 crore if fully subscribed.

By acquiring 37.75% stake, Maran will be the single largest shareholder with a significant minority position. Post the open offer, he will assume 57.75% that will give him full control.

The development comes at a time when SpiceJet announced $75-million fundraising either through ADR, GDR or QIP.

The stake purchase from WL Ross involves acquisition of around a 10% stake which is already converted. The rest are in the form FCCBs which when converted would amount to another 20% stake. The overall 30% stake held by WL Ross will be acquired for Rs 593 crore. Promoter Kansagra family, which holds around a 9.67% stake through Royal Holdings Services Ltd, is selling its stake to Maran for Rs 146.84 crore.

“We simply feel that the management we installed has turned the company around and therefore it is ready for the next phase of ownership and expansion,” Ross was quoted saying in the Financial Times.

A source, familiar with the development said, the price of Rs 47.25 per share of SpiceJet is the true and full valuation. “Although it comes at a discounted price, it is in line with the nature of the deal which is a strategic acquisition,” the source said. The shares of Spicejet were trading at Rs 55.05, down by 1.68% at 3:05 pm today. The open offer, that has been made to acquire the 20% stake, has been made at the prevailing market price.

Law firm Amarchand Mangaldas Bangalore office advised Maran on the deal while the legal advisor to WL Ross was AZB Partners Mumbai. Link Legal Delhi advised the Kansagara family on the transaction.

Enam is the merchant banker to the deal while Edelweiss advised Spicejet and Royal Holdings and E&Y was the financial advisor to Maran.

Sources familiar with the transaction told VCCircle that the agreement with the Kansagra family covers a non-compete clause whereby the existing promoters cannot enter the aviation industry. There are limited restrictions on Wilbur Ross too covering the Indian aviation sector. The deal is subject to certain approvals from the civil aviation ministry and the Reserve Bank.

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