No offer yet, but we’re interested in Jet: Tatas

IN TALKS Concrete proposal likely in coming weeks once due diligence is over

MUMBAI: Tata Sons Ltd, the holding company of Tata Group, said on Friday it is in talks to acquire a controlling stake in Jet Airways, the cash-strapped airline that has been looking to raise equity to meet debt repayments and manage operating expenses.

“Over the last few days there has been growing speculation in the print and electronic media about Tata’s interest in Jet Airways,” Tata Sons said after a board meeting.

“We would like to clarify that any such discussions have been preliminary and no proposal has been made.”

Spokespersons of Tata Sons did not divulge details, but two people aware of the discussions said a concrete proposal is likely in the coming weeks once the due diligence of Jet Airways’ books that is currently underway concludes. Both asked for anonymity.

Also, Etihad Airways of United Arab Emirates has to agree to sell a part of its stake in Jet Airways to either Tata or one of its foreign partners to keep the foreign holding under the 49% allowed under the foreign direct investment ( FDI) norms, said the first of the two people mentioned above.

“However, it is possible that Tatas may pick up stake in Jet Airways on its own and without involving its foreign partners for now to overcome the FDI tangle,” the second person said.

“Like (Jet Airways chairman) Naresh Goyal, who is expected to seek a premium to relinquish control, Etihad too may seek a premium to sell its stake in the Jet Airways,” the second person added.

Mint reported on November 13 that an in-house team of Tata Sons is conducting due diligence of Jet Airways (India) Ltd.

It also reported that Saurabh Agrawal, chief financial officer (CFO), is leading the discussions for Tata Sons while Jet Airways is represented by Goyal. “There are several issues which need to ironed out,” said the first person mentioned above.

Apart from the final valuation, the two sides are also in talks on ways to integrate Jet Airways’ other units, such as ground handling and other support units, with Tata Group-controlled Vistara, a joint venture with Singapore Airlines, and AirAsia India, a joint venture with AirAsia Bhd.

“The other issue is rationalization of the workforce, which requires careful consideration given the implications,” said the second person mentioned above.

Mint reported on November 16 that Tata Sons is exploring various

JET AIRWAYS, WHICH HAD A 14.2% SHARE OF THE DOMESTIC AVIATION MARKET IN SEPT, NEEDS TO URGENTLY RAISE CASH TO STAY AFLOAT

options, including a potential merger with unlisted Vistara, which could eventually lead to the reverse listing of the airline.

Jet Airways, which had a 14.2% share of the domestic aviation market in September, needs to urgently raise cash to stay afloat as sharply higher fuel prices and a weak rupee have eroded its financial health. Acquisition of Jet Airways will increase its combined market share about threefold to 24% from 8.2% as of end-September.

IndiGo, India’s largest domestic operator run by InterGlobe Aviation Ltd, had a market share of 43.2% as of end-September.