Etihad need not make open offer for Jet shareholders: Sebi
May 08 2014 , Mumbai
Clearing the regulatory hurdles for the high profile deal, the Securities and Exchange Board of India (Sebi) also ruled that Etihad "has not acquired control over Jet".
Etihad has purchased 24 per cent stake in Jet Airways in a deal worth about Rs 2,060 crore deal which was announced in April 2013.
"...The fact that existing promoters hold 51 per cent shares and voting rights in Jet strengthen the stand of Sebi as communicated to Ministry of Finance vide letter dated September 25, 2013 that Etihad cannot be termed as a person acting in concert along with the existing promoters of Jet under... Takeover Regulations, 2011," the regulator said in its 17-page order.
Under Sebi norms, an entity acquiring control in a listed company has to make an open offer to the target firm's shareholders.
The deal, which was restructured last year to address concerns raised by Sebi and Competition Commission of India (CCI), was consummated late in 2013.
While clearing the deal, CCI had observed that Etihad was getting "significant rights" and "joint control" in running Jet Airways. The two carriers later petitioned CCI to remove this observation, but the plea was rejected.
Following Competition Commission's observations, Sebi had decided to have a fresh look at the deal. The capital market watchdog mainly looked into whether Etihad and the existing promoters of Jet were persons acting in concert (PACs) for the purpose of alleged 'joint control' over Jet.
Besides, Sebi also checked whether the rights of Etihad under the transaction documents confer 'joint control' over Jet to Etihad.