Jet Airways is yet to fully convince the Securities and Exchange Board of India (SEBI) over control issues in the proposed deal with Abu Dhabi-based Etihad Airways.
Etihad plans to buy a 24 per cent stake in the Indian carrier for Rs 2,058 crore. The deal is the biggest in India’s aviation history.
Takeover Code
“Some clarifications have been given. These are significant, but not complete,” a highly-placed source told
It seems the airline is yet to satisfy the regulator that post the deal, control will vest with Indian nationals and operational control, in all senses, will remain in India.
SEBI is examining the applicability of the Takeover Code in the context of ‘effective control’, based on certain clauses of the agreement between the two airlines.
The regulator has sought some clarifications on this.
Normally, the Takeover Code is applied in two situations. One, when 25 per cent or more shares are sold and, two, when control is acquired, even if less than 25 per cent shares are transacted.
In both situations, the acquirer is required to announce an open offer to get more shares and help other shareholders, especially the minority ones. Now, it has been clarified that the regulator, too, will look into any case where it is believed or there is a suspicion that control has been acquired.
No deadline
Asked if the regulator has set the airline any deadline for submitting the clarification, the source said it had not. This may further delay completion of the sale.
This is because the Foreign Investment Promotion Board (an inter-Ministerial body that approves FDI proposals) is waiting for a final view from SEBI before reconsidering the proposal.
The FIPB deferred the proposal at its June 14 meeting.