Jet-Etihad deal reaching final stage

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Negotiations to keep Jet Airways afloat have entered the final phase with promoter Naresh Goyal agreeing to step down from the restructured airline’s board if Abu Dhabi-based Etihad gives the “right price” for upping its stake. Etihad had last week told SBI it will buy Jet shares at Rs 150 apiece, a valuation that did not go down well with Goyal.

“Goyal is not adamant about not stepping down. He is holding on till the right valuation is arrived at,” said a person in the know, indicating that the carrier’s boss is negotiating hard, despite the woes faced by what was once a marquee airline.

In case of a management change of a company through a takeover, the new buyer has to make an open offer to the general public to buy an additional 25% shares.

According to Sebi’s takeover norm, the open offer price has to be the highest of the prices determined under four different parameters — the negotiated price between the buyer and the selling promoter, a volume-weighted average price of the last 52 weeks before the public announcement about the takeover, the highest price that the buyer paid in the last 26 weeks before the announcement of the takeover, and the volume-weighted average price of 60 trading days before the announcement of the takeover.

Jet’s share price in last 52 weeks has seen a low of Rs 163 and a high of Rs 830 (Monday closing was Rs 276). “Etihad’s offer price of Rs 150 and its request for open offer not being triggered when it increases stake may not be in accordance with Sebi takeover code. SpiceJet’s founder-promoter Ajay Singh was given exemption from open offer when he acquired the low-cost from its previous owners in 2015, but Sebi has to decide on a case-tocase basis. There has to be a way that meets Sebi norms,” said the source.

“At Rs 150 per share, Etihad has valued Jet roughly at $250 million, or about Rs 1,800 crore (keeping $1 at Rs 72). Lenders got an evaluation of Jet done that was much higher,” the source added.

While Jet did not comment on this issue of Goyal

agreeing to step down at “right” valuation, Etihad did not say if it will up its offer price for the airline. It is learnt that Etihad will approach SBI — which is leading the consortium of lenders with an over Rs 8,200-crore exposure to Jet — with a free offer this week.

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