Sebi takes fresh look at Jet-Etihad Airways deal

Tags: SEBI, News
Capital market regulator Sebi is taking a fresh look at the Rs 2,060 crore

RELATED ARTICLES

Jet-Etihad Airways deal following observations made by fair trade watchdog Competition Commission.

Abu Dhabi-based Etihad's acquisition of a 24 per cent stake in Naresh Goyal-led Jet Airways, the first foreign direct investment (FDI) in an Indian carrier by an overseas airline, was announced in April 2013 and approved by the Securities and Exchange Board of India (Sebi) last year.

Sources said Sebi is looking afresh at the deal after the Competition Commission of India (CCI) made observations regarding control over Jet Airways. The CCI, while giving its green signal to the transaction in November, had said there were no anti-competitive concerns.

"It is observed that the parties have entered into a composite combination comprising inter alia the IA (Investment Agreement), SHA (Shareholder's Agreement) and the CCA (Commercial Co-operation Agreement), with the common/ultimate objective of enhancing their airline business through joint initiatives.

"The effect of these agreements, including the governance structure envisaged in the CCA, establishes Etihad's joint control over Jet, more particularly over the assets and operations of Jet," the CCI said in its order on November 12.

Besides, the trade watchdog observed that "Etihad's acquisition of 24 per cent equity stake and the right to nominate two directors, out of the six shareholder directors, including the vice-chairman in the board of directors of Jet, is considered as significant in terms of Etihad's ability to participate in the managerial affairs of Jet."

BJP leader Subramanian Swamy had written to Sebi asking Etihad to be considered a 'person acting in concert' with Jet's current promoters for this deal.

While approving the deal, Sebi is believed to have said that Etihad would not be required to make an open offer to Jet shareholders and the two airlines would not be treated as persons acting in concert.

"...The rights proposed to be acquired by Etihad do not, prima facie, appear to result in change in control and consequently, do not attract the provisions of...Takeover Regulation, 2011," it had opined.

On the other hand, CCI's approval for the Jet-Etihad deal has been challenged in the Competition Appellate Tribunal.

Jet and Etihad closed the deal and said all requisite regulatory approvals from Indian authorities had been obtained on November 12, according to a November 20 statement.

Etihad President and Chief Executive Officer James Hogan and Chief Financial Officer James Rigney were appointed as additional directors on Jet's board.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • FDI in insurance must be allowed with a rider to increase penetration

    The Union cabinet has cleared the proposal to raise foreign direct investment (FDI) in the insurance sector through the FIPB route from the current 26

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

Which is safer? Flying or driving?

The recent tragedies involving the Taiwan’s TransAsia Airways flight, and ...

Parvez Imam

Revisiting history can do us all good

We often think that we understand history. We read it ...

Bubbles Sabharwal

Your happiness doesn’t depend on your needs

They are two different words (and even worlds) altogether: having ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture