Sebi hearing: Etihad denies violations during Jet stake buy

Regulator likely to pass order in the matter

Abu Dhabi-based Etihad Airways on Wednesday denied violation of the takeover code at a hearing before capital markets regulator Securities and Exchange Board of India (Sebi), sources said.

The hearing pertains to a show-cause notice issued by Sebi to Etihad for alleged violation of the takeover code while acquiring nearly a fourth in the Indian carrier, Jet Airways.

Lawyers representing Etihad met a Sebi team led by whole-time member Rajeev Agarwal on Wednesday.

Sebi, in February, had served the notice asking the airline why action shouldn't be taken.

Sebi, in its findings, had concluded the transaction involving Etihad picking a 24 per cent stake in Jet would result in change of control.

Sebi's findings were based on fair-trade regulator Competition Commission of India (CCI)'s observation the deal gave 'joint control' to the two airlines.

Sources said Etihad, at the personal hearing, had told Sebi the interpretation of 'control' was different from the perspective of the competition law and securities law.

The airline highlighted the regulator, during its preliminary investigation, had given a go-ahead to the deal and had observed the deal didn't trigger an open offer.

Sebi's earlier observations, however, also had a warning: If any other regulator said Etihad was acquiring control over Jet, the two would be deemed acting in concert.

By Sebi's takeover code rules, an open offer is triggered in multiple ways, including when an entity acquires 25 per cent stake in a listed firm and or acquires 'control' over it.

Sebi can pass an order on the issue in a week. In case of an adverse one, Etihad might have to make an open offer for the minority shareholders of Jet.

Naresh Goyal owns 51 per cent stake and Etihad 24 per cent in Jet. The rest (25 per cent) is with public shareholders.

Shares of Jet closed at Rs 289.6, up six per cent on Wednesday.

Etihad had acquired a 24 per cent stake in Jet at Rs 754.7 a share a year back.