Jet Airways (India) gains after Sebi says Etihad does not need to make open offer

Jet Airways (India) gained 2.77% to Rs 242.60 at 10:52 IST on BSE after Sebi said that Etihad does not need to make an open offer for shares in the domestic carrier.

Meanwhile, the BSE Sensex was up 231.61 points, or 1.04%, to 22,575.65

On BSE, so far 3.64 lakh shares were traded in the counter, compared with an average volume of 4.36 lakh shares in the past one quarter.

The stock hit a high of Rs 245.80 and a low of Rs 231.10 so far during the day. The stock hit a 52-week high of Rs 610.40 on 8 May 2013. The stock hit a 52-week low of Rs 210.25 on 5 February 2014.

The stock had underperformed the market over the past one month till 8 May 2014, falling 13.41% compared with no change in the Sensex. The scrip had also underperformed the market in past one quarter, rising 3.3% as against Sensex's 9.66% rise.

The small-cap company has an equity capital of Rs 113.60 crore. Face value per share is Rs 10.

Market regulator Securities and Exchange Board of India (Sebi) on Thursday, 8 May 2014 ruled that Etihad Airways' purchase of a 24% stake in Jet Airways (India) did not amount to a change in ownership and the Abu Dhabi-based carrier does not need to conduct a tender offer for shares in the Indian carrier.

Clearing the regulatory hurdles for the high profile deal, the Sebi has ruled that Etihad has not acquired control over Jet.

The fact that existing promoters hold 51% shares and voting rights in Jet strengthen the stand of Sebi as communicated to Ministry of Finance vide letter dated 25 September 2013 that Etihad cannot be termed as a person acting in concert along with the existing promoters of Jet under the Takeover Regulations, 2011, the regulator said in its 17-page order.

One regulatory agency i.e. Foreign Investment Promotion Board, has concluded that 'effective control' in Jet remains with Indian nationals i.e. existing promoters of Jet consequent to the deal between them as contemplated in the above referred Transaction Documents, the Sebi order said.

While clearing the deal, CCI had observed that Etihad was getting significant rights and joint control in running Jet Airways. Following CCI's observations, Sebi had decided to have a fresh look at the deal.

Etihad had purchased 24% stake in Jet Airways in a deal worth about Rs 2060 crore which was announced in April 2013. The deal, which was restructured last year to address concerns raised by Sebi and Competition Commission of India was consummated late in 2013.

According to Sebi's takeover regulations, an acquirer must make an open offer to the minority shareholders of a company if it buys 25% in that company, or if it gains control of the company despite holding stake less than 25%.

Jet Airways (India) reported a net loss of Rs 267.89 crore in Q3 December 2013 as against net profit of Rs 85 crore in Q3 December 2012. Net sales rose 7.3% to Rs 4229.41 crore in Q3 December 2013 over Q3 December 2012.

Jet Airways currently operates a fleet of 113 aircraft. With an average fleet age of 5.18 years, the airline has one of the youngest fleet of aircraft in the world. The company operates flights to 75 destinations.

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