Jet Airways rallies over 4% as Sebi exempts Etihad from making an open offer

NEW DELHI: Jet Airways Ltd rallied as much as 4.1 per cent in morning trade on Friday, after the Securities and Exchange Board of India ruled that Etihad wouldn't get effective control of Jet Airways through its recently concluded 24 per cent stake purchase in the airline and exempted it from making an open offer for more shares in Jet Airways.

At 09:40 a.m.; Jet Airways was trading 3.1 per cent higher at Rs 243.50. It hit a low of Rs 231.10 and a high of Rs 245.80 in trade today.

According to the SEBI, all of the voluntary changes made the by the airlines have been made to ensure that there is absolute certainty that "effective control" of Jet is and continues to vest in Indian nationals and the board of Jet.

"The decision, favourable to Etihad, clears a legal hurdle that had delayed the airlines' plans to sell tickets jointly on their integrated network and the appointment of a new CEO at Jet Airways," ET said in a report.

In mid-February, the regulator had issued a showcause notice to Etihad Airways, referring to an observation by the Competition Commission of India (CCI) that said the gulf carrier had violated takeover norms while purchasing a fourth of Jet Airways, added the ET report.

A show-cause notice is not an indictment but it seeks to know why action should not be taken against a company or person for securities law violations.

The Jet-Etihad $37-million deal has run into several regulatory and legal hurdles after it was announced in April 24 last year. On June 14, the FIPB deferred its nod on the stake-sale proposal, seeking clarification on the ownership control post the deal.

Jet made key changes to the original proposal, cutting the number of Etihad's nominees on Jet's board to two from three. The deal got approvals from FIPB, Sebi and the CCI between July and October.