Etihad Not Compelled To Make An Open Offer

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  • Securities Exchange Board of India (SEBI) has said that Etihad need not make an open offer to Jet share holders following its purchase of 24% stake in Jet airways in a Rs.2,060 crore deal between them both. This decision will leverage the funds and mutual benefits of both the companies.
  • This is because the existing promoters hold 51% shares and voting rights in Jet, and that Etihad cannot be termed as a person acting in concert along with the existing promoters of Jet.
  • Under SEBI norms, any entity acquiring control in a listed company is supposed to make an open offer to the target firm’s shareholders.
  • While clearing the deal, Competition Commission of India (CCI) noted that Etihad was acquiring significant rights and joint control in the operation of Jet Airways. This had prompted SEBI to look into whether the existing promoters of Jet were persons acting in concert (PACs) and whether joint control over ‘Jet’ is conferred to Etihad as per the transactions.
  • SEBI concluded that joint control over an enterprise does not imply joint control for the purposes of the Takeover Regulations, 2011.
  • According to some, the govt should consider raising FDI limit in airlines from 49% to 100%.
  • Read at: http://www.thehindu.com/todays-paper/tp-business/etihad-need-not-make-open-offer-to-jet-shareholders-sebi/article5991261.ece

Exams Perspective:

  1. What is Competition Commission of India (CCI)?
  2. What is an open offer?
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