Deal took place 7 months after Naresh Goyal, Etihad CEO inked the deal, now amounting to Rs 2,060 cr
Jet Airways on Wednesday concluded its stake sale with Etihad Airways giving the Abu Dhabi airline 24% equity worth Rs 2,060 crore.The share allotment took place seven months after airline's chairman Naresh Goyal and Etihad CEO inked the deal in Abu Dhabi.
The deal missed closure deadlines twice and has courted controversy from day one with the simultaneous increase in traffic rights to Abu Dhabi. The Competition Commission of India clearance last week, the last of the regulatory approvals, paved way for the closure.
On Wednesday, Jet Airways board approved the preferential issue of 27.26 million equity shares to Etihad at Rs 754 per share (a premium of Rs 744 per share). Post transaction Goyal holds 51% stake in the airline and balance 25 share holders are with public and other institutional investors. Etihad too has been treated as a public share holder.
The transaction formally concluded on Wednesday but Etihad has been driving changes in Jet for the last few months. The Indian airline has several high profile exits including that of its then CEO Nikos Kardassis, its investor relations head, K G Vishwanath, and two key finance executives.
While these are administrative changes the deal will also see Jet Airways integrate its network with that of Etihad and work jointly in areas such as sales, marketing, ground handling and cargo. While Etihad has already announced doubling of services from Abu Dhabi to Delhi and Mumbai, Jet is yet to announce additional flights to Abu Dhabi.
The commercial co-operation agreement signed between two airlines also states that Jet would use Abu Dhabi as its hub for services to and from "exclusive territories'' ( Africa, North and South America excluding Canada and the UAE). Consequently Jet has also agreed to timely transition of all its current services to and form Dubai and Sharjah to Abu Dhabi when the same becomes economically viable. Also under the agreement Jet will refrain from entering into any code share agreements with other airlines which would result in bypassing Abu Dhabi.
"“It (the deal) is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years. The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world,'' Hogan had said after the signing the alliance in April.
The deal missed closure deadlines twice and has courted controversy from day one with the simultaneous increase in traffic rights to Abu Dhabi. The Competition Commission of India clearance last week, the last of the regulatory approvals, paved way for the closure.
On Wednesday, Jet Airways board approved the preferential issue of 27.26 million equity shares to Etihad at Rs 754 per share (a premium of Rs 744 per share). Post transaction Goyal holds 51% stake in the airline and balance 25 share holders are with public and other institutional investors. Etihad too has been treated as a public share holder.
The transaction formally concluded on Wednesday but Etihad has been driving changes in Jet for the last few months. The Indian airline has several high profile exits including that of its then CEO Nikos Kardassis, its investor relations head, K G Vishwanath, and two key finance executives.
While these are administrative changes the deal will also see Jet Airways integrate its network with that of Etihad and work jointly in areas such as sales, marketing, ground handling and cargo. While Etihad has already announced doubling of services from Abu Dhabi to Delhi and Mumbai, Jet is yet to announce additional flights to Abu Dhabi.
The commercial co-operation agreement signed between two airlines also states that Jet would use Abu Dhabi as its hub for services to and from "exclusive territories'' ( Africa, North and South America excluding Canada and the UAE). Consequently Jet has also agreed to timely transition of all its current services to and form Dubai and Sharjah to Abu Dhabi when the same becomes economically viable. Also under the agreement Jet will refrain from entering into any code share agreements with other airlines which would result in bypassing Abu Dhabi.
"“It (the deal) is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years. The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world,'' Hogan had said after the signing the alliance in April.
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