5/10/2014 Etihad need not make open offer for Jet shareholders: SEBI - The Hindu

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Business Industry
Etihad need not make open offer for Jet shareholders: SEBI
PTI
Etihad has purchased 24 per cent stake in Jet Airways in a deal worth about Rs.2,060 crore deal.
The Abu Dhabi carrier has not acquired control over Jet
In a major relief for Jet Airways and Etihad, the Securities and Exchange Board of India (SEBI), on Thursday, said the
Abu Dhabi carrier did not have to make an open offer for Jet shareholders pursuant to the Rs.2,060-crore stake deal
between them. Clearing the regulatory hurdles for the high profile deal, SEBI also ruled that Etihad has not acquired
control over Jet.
Etihad has purchased 24 per cent stake in Jet Airways in a deal worth about Rs.2,060 crore deal, which was
announced in April, 2013.
...the fact that existing promoters hold 51 per cent shares and voting rights in Jet strengthen the stand of SEBI as
communicated to the Ministry of Finance vide letter dated September 25, 2013 that Etihad cannot be termed as a
person acting in concert along with the existing promoters of Jet under... Takeover Regulations, 2011, the regulator
said in its 17-page order.
Under SEBI norms, an entity acquiring control in a listed company has to make an open offer to the target firms
shareholders.
The deal, which was restructured last year to address the concerns raised by SEBI and the Competition Commission
of India (CCI), was consummated late in 2013.
While clearing the deal, the CCI had observed that Etihad was getting significant rights and joint control in running
Jet Airways. The two carriers later petitioned the CCI to remove this observation, but the plea was rejected.
Following the Competition Commissions observations, SEBI had decided to have a fresh look at the deal. The capital
market watchdog mainly looked into whether Etihad and the existing promoters of Jet were persons acting in concert
(PACs) for the purpose of alleged joint control over Jet.
Besides, SEBI checked whether the rights of Etihad under the transaction documents confer joint control over Jet to
Etihad.
According to SEBI, a conclusion of the Competition Commission that two parties are in joint control over an
enterprise does not automatically lead to establishing joint control for the purposes of the Takeover Regulations, 2011.
Commenting on the SEBI order, global consultancy KPMG said the decision would allow Jet Airways to bring in the
much needed funds and leverage the synergy benefits of the Etihad network. The new government should consider
5/10/2014 Etihad need not make open offer for Jet shareholders: SEBI - The Hindu
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raising the FDI limit in airlines from 49 per cent to 100 per cent as per the Mayaram Committee report, it added.
Partner and India head of aerospace and defence at KPMG, Amber Dubey said: All the precious man-hours spent by
government agencies and regulators on evaluating a subjective concept called control in a private corporate entity
could have been put to better use.
Keywords: SEBI, Jet shareholders, Jet Airways, Etihad, Jet-Etihad deal