Jet-Etihad alliance triggers open offer, says SES

The deal between Jet Airways and UAE-based Etihad Airways should trigger an open offer, says proxy advisory firm Stakeholders Empowerment Services (SES).

“Jet has announced Etihad has agreed to subscribe to a preferential issue, SES is of the opinion that an open offer should have been triggered under the SAST Regulations. The public announcement for an open offer should have been made on the date of the agreement. Since that date has already passes, SES is of the opinion that the Company is non-compliant with the SAST (Substantial Acquisition of Shares and Takeover) Regulations,” the firm has said in a report.

Jet announced last week the UAE national carrier had agreed to subscribe for about 27 million new shares (24 per cent stake after dilution) in Jet Airways for $379 million (about Rs 2,000 crore). The two airlines, however, haven’t announced any open offer as the trigger limit is 25 per cent, under the new takeover code regulations. “Shares and voting rights being acquired by Etihad are below the trigger level (24 per cent of equity capital or voting rights) prescribed in Regulation 3(1) and therefore, do not trigger the takeover code.

However, there is no minimum limit or threshold level of shares or voting rights for control that will trigger the takeover code. SES understands that if any agreement, written or oral, puts any person in position of control, such an agreement will trigger provisions of the SAST Regulations," said the SES report.

The Mumbai-based proxy advisory firm believes that Jet, Etihad and current promoters (Tail Winds) are person acting in concert (PAC) and this triggers an open offer under SAST Regulations.