The Securities and Exchange Board of India (Sebi) will pass a final order in a few days on whether the Jet-Etihad deal violated takeover rules.
On Wednesday, Sebi concluded the hearing with officials and lawyers of Etihad Airways and reserved its verdict on the deal in which the Abu Dhabi-based airline acquired a 24% stake in the Indian carrier in October last year.
The counsel for the two airlines clarified their stance on the word ‘control’ over the assets and decisions pertaining to the operations of Jet Airways, a source told FE. This comes after the regulator had issued a showcause to Etihad in February this year asking why action should not be taken against the airline for not making an open offer since it was getting into a controlling position in Jet with the stake purchase and with two members on the board.
Etihad, however, rejected any obligation to make an open offer to minority shareholders, stating that the deal was in accordance with the securities law of the country.
Apart from the 24% stake in the BSE-listed Jet Airways, Etihad had also bought a 50.1% stake in Jet Privilege (JPPL), a frequent flyer programme of Jet Airways. The Competition Commission of India (CCI) had cleared the deal in February, stating the transaction may not have an adverse impact on competition as the two airlines were already partners in their respective frequent flyer programmes.
As per the Sebi takeover rules, an open offer gets triggered if an acquirer buys at least a 25% stake in a target company or if a significant change in management control accompanies a stake purchase below the threshold.