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Maran buys 37.7% stake in SpiceJet for about Rs 750 cr

Media magnate Kalanithi Maran on Saturday entered into an agreement to acquire over 37 per cent equity in low-cost carrier SpiceJet.

business Updated: Jun 12, 2010 22:06 IST

New Delhi, June 12 (PTI) Media magnate Kalanithi Maran today entered into an agreement to acquire 37.7 per cent
equity in low-cost airline SpiceJet for an estimated Rs 750 crore, thus becoming its single largest stakeholder.

The stake has been acquired by Maran, Chairman and MD of Chennai-based Sun TV Network, in his individual capacity and
through his aviation company KAL Airways.

The shares have been acquired from current SpiceJet promoters, American investor Wilbur Ross and his investment
companies, and Kansagara family-promoted Royal Holding Services Ltd. The deal is said to have been reached after
several rounds of intense negotiations.

While it could not be ascertained the price at which the deal was struck, sources said Maran bought the 37.7 per cent
stake at a price of around Rs 48 per share, entailing a total payout of about Rs 750 crore.

According to sources, the mandatory open offer to acquire an additional 20 per cent stake in Spicejet will be around Rs 58 per share. As on March 31, 2010, public shareholding in SpiceJet stood at 87.15 per cent including 34.28 per cent held by institutional investors from India and abroad.

SpiceJet's share closed yesterday at Rs 56.05 a share, three per cent lower from its previous close, on the Bombay
Stock Exchange though market sentiment was favourable and the BSE benchmark index Sensex shot up by 142 points to end at 17,064.95 points.

For some time, SpiceJet has been in the process of raising USD 75 million (about Rs 350 crore) through placement
of shares. The deal ends the drought of mergers and acquisition in the domestic aviation sector since the buyout of Air Deccan by Kingfisher and Jet Airways' acquiring Air Sahara over three years ago.

"There is a entry of a strong entrant in the aviation sector. It will be good for the industry," said Salil Pitale,
Executive Director, Investment Banking, Enam Securities, which was the main advisor to the deal.

On global aviation front, United Airlines merged with Continental last month in an all-share deal valued to create
the world's largest carrier. The airline, India's second largest low-cost carrier, has a market share of about 13 per cent and has a fleet size of 20 aircraft serving 19 destinations across the country.

It plans to launch international flights, starting with services to neighbouring Bangladesh and Nepal from this
month. It recently got the government approval to start international operations and reported revenue of Rs 2242 crore and a profit of Rs 61.4 crore for the year ended March 31, 2010.

First Published: Jun 12, 2010 20:56 IST