Early talks on, formal proposal yet to take off: Tatas on Jet Deal
The rumour of the rescue deal by the Tatas, reportedly being brokered by the government, sent Jet shares zooming 26.41 percent Thursday.
By ET Bureau | Updated:
Talks are only in preliminary stage: Tata Sons on buying stake in Jet Airways
MUMBAI: Tata Sons said it’s in preliminary discussions with Jet Airways but is yet to make any formal proposal to take over India’s second-biggest airline by revenue.
“Over the last few days there has been growing speculation in the print and electronic media about Tata’s interest in Jet Airways,” the Tata group holding company said in a release on Friday, going public with the news for the first time. “We would like to clarify that any such discussions have been preliminary and no proposal has been made.”
The Tata Sons board, which met earlier in the day, fully backed chairman N Chandrasekaran’s efforts to strengthen the airline business of the group, multiple sources told ET. The group has two joint ventures in the sector — full-service Vistara with Singapore Airlines and low-cost AirAsia India with AirAsia Bhd.
Talks are being led by Chandrasekaran and the Tata mergers and acquisitions team with inputs from chairman emeritus Ratan Tata, said people with knowledge of the matter. ET first reported on November 15 that the Tata group was in talks with Jet for an allstock merger with its joint venture with Singapore Airlines. ET reported Friday that the group may seek to end its partnership with AirAsia to focus on Vistara. Tata and Naresh Goyal-promoted Jet Airways are planning a two-step transaction, the first leg of which could see the merger of Jet with Tata SIA Airlines, the joint venture that operates Vistara. The second step of the deal could involve the purchase of the Goyal family’s stake in the combined entity by Singapore Airlines, sources have told ET.
On Friday, Jet Airways shares ended up 8.07% at Rs 346.85 on BSE.
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The Tata group is looking to strengthen its aviation business, which has been hobbled by the lack of a nationwide network. The transaction, if successful, will give its aviation plans a much-needed beachhead as it will secure landing rights, routes and related infrastructure amenities of Jet after the deal. Tata and Singapore Airlines are expected to infuse capital to enable the Jet-Vistara combine to function effectively, if the deal goes through.
Jet has been in talks with both strategic and financial investors to sell assets and a major chunk of its business to stay afloat.
