Jet Airways flies nearly 8% on approval for Etihad deal; SpiceJet rallies
After the deal is ratified, Naresh Goyal will hold 51% in the airline, Etihad will have 24% while the balance 25% will be held by the public.
By ET Online | Updated:
NEW DELHI: Shares in Jet Airways (India) Ltd surged as much as 7.9 per cent in morning trade on Tuesday after the Foreign Investment Promotion Board ( FIPB) on July 29 cleared the Rs 2,058-crore Jet Airways-Etihad deal with some riders.
Etihad had first agreed in April to buy a 24 per cent stake in Jet Airways in the first such deal since the government allowed foreign airlines to own up to 49 per cent of Indian carriers last September.
After rising nearly 22 per cent over the previous two sessions on speculation the deal would be approved, shares of Jet Airways rallied nearly 8 per cent in morning trade today.
At 09:40 a.m.; Jet Airways pared some of the morning gains and was trading 2.4 per cent higher at Rs 422.10. It had hit a low of Rs 417 and a high of Rs 445 in trade today.
Reacting to the news, shares of SpiceJet also managed to climb over 7 per cent in morning trade. However, the stock pared some of the morning gains and was trading 6.3 per cent higher at Rs 28.55.
Jet Airways had submitted a modified shareholder agreement on July 25 that appeared to address all concerns raised by various ministries and stock market watchdog Sebi.
The Indian authorities were concerned that the original agreement signed in April this year would result in the Abu Dhabi-based carrier acquiring effective control of India's largest airline by revenues, though it formally had only a 24% equity stake.
“The riders stipulated by FIPB relate to applicability of Indian law to shareholder disputes. All disputes between shareholders or on interpretation of the shareholder's agreement, FIPB has said, will have to be adjudicated under Indian law as opposed to English law proposed in the revised agreement,” ET reported.
“But arbitration on any other issue can be carried out under English law. Also, the 9% stake owned by Tailwinds, a holding company, in Jet will have to be directly owned by Jet Chairman Naresh Goyal,” added the report.
After the deal is ratified, Goyal will hold 51 per cent in the airline, Etihad will have 24 per cent while the balance 25 per cent will be held by the public.
Etihad had first agreed in April to buy a 24 per cent stake in Jet Airways in the first such deal since the government allowed foreign airlines to own up to 49 per cent of Indian carriers last September.
After rising nearly 22 per cent over the previous two sessions on speculation the deal would be approved, shares of Jet Airways rallied nearly 8 per cent in morning trade today.
At 09:40 a.m.; Jet Airways pared some of the morning gains and was trading 2.4 per cent higher at Rs 422.10. It had hit a low of Rs 417 and a high of Rs 445 in trade today.
Reacting to the news, shares of SpiceJet also managed to climb over 7 per cent in morning trade. However, the stock pared some of the morning gains and was trading 6.3 per cent higher at Rs 28.55.
Jet Airways had submitted a modified shareholder agreement on July 25 that appeared to address all concerns raised by various ministries and stock market watchdog Sebi.
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The Indian authorities were concerned that the original agreement signed in April this year would result in the Abu Dhabi-based carrier acquiring effective control of India's largest airline by revenues, though it formally had only a 24% equity stake.
“The riders stipulated by FIPB relate to applicability of Indian law to shareholder disputes. All disputes between shareholders or on interpretation of the shareholder's agreement, FIPB has said, will have to be adjudicated under Indian law as opposed to English law proposed in the revised agreement,” ET reported.
“But arbitration on any other issue can be carried out under English law. Also, the 9% stake owned by Tailwinds, a holding company, in Jet will have to be directly owned by Jet Chairman Naresh Goyal,” added the report.
After the deal is ratified, Goyal will hold 51 per cent in the airline, Etihad will have 24 per cent while the balance 25 per cent will be held by the public.
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