Jet Etihad Deal Analysis Essay

fount-Etihad dealOn April 24 kB Airways and Etihad signed the strategical alliance. The Etihad agrees to buy a 24% stake in the greens for near Rs 2,060 crore. It is the biggest deal in Indian aviation sector. On May 24, Jet sh atomic number 18holders approved the stake sale. The airline deferred its resolution to am closing the companys articles of association. However the deal is facing hurdles with share holders and even Securities and convert Board of India (Sebi) and Foreign Investment procession Board (FIPB) of India raising concerns all over substantial declines being accorded to Etihad Airways. The FIPB has deferred granting sanction to the proposal until the government issues regarding direct are saluteed. The Jet Airways-Etihad share holder agreement is likely to be revised once again following SEBI and FIPB concerns over substantial control to the Abu Dhabi airline under the deal. The study concern of SEBI and FIPB were-* at a lower place the current agreeme nt board resolutions require try for of 3/4th of members majority for decision and As per the agreement Etihad would demoralise three board positions while Jet Airways would have four members. there pull up stakes be seven independents on the board. * The agreement has unilateral right hand and can be terminated by Etihad any time. * The jet airways home base will be shifted to Abu Dhabi where it is subjected to law and control of Abu Dhabi. On May 27, the cardinal airlines amended its shareholder agreement to address shareholder and SEBI concerns on control and ownership. The major changes were- * Etihad will not have the unilateral right to terminate the commercial cooperation agreement and this right will now be held by both sides. * The other(a) change pertained to constitution of the nomination delegation of the board which will snitch key board and management appointments. The nomination committee will include one person nominated for each one by Jet Airways and Eti had and three other board members will be chosen through consensus. But still the Foreign Investment Promotion Board defers approval to Jet-Etihad alliance due to More changes were being proposed to address the concerns.Impact on Economy, Stock Market and various other AreasThe privilege of the bilateral pact point to the 1.8 million Indians who live and work in the UAE that, they can fly to India cheaply. Earlier they had to spend their yearly savings to make one trip back home. The latest exchange of seats with Abu Dhabi is because of Abu Dhabi has concord to invest $50 billion in infrastructure projects in India. It will lead to reaping of aviation sector and will generate habit in India. The agreement has a clause that deal can be terminated if requisite permissions are not received before July 31. However, the discussions are now on to renegotiate the terms of the deal at a price lower than that agreed upon earlier. The two airlines are now discussing changes in the investo r agreement. These include a possible revision in purchase price. Under the agreement signed by the airlines on April 24, Jet Airways had agreed to issue 24 per cent equity to Etihad by way of preference shares in a deal valued at about Rs 2,060 crore. Etihad had agreed to a pay a premium of 31 per cent on Jets stock price (Rs 573 at that time). The Jet stock send away four per cent from its previous close on BSE to end the day at Rs 403.45. after the FIPB decided to defer the approval of Jet-Ethiad deal. It kick upstairs fell drastically and came to 369.85 till date. Impact if deal is approved by FIPBIf the deal gets green signal from the regulating authorities, their would be a electropositive impact on our economy. It will push the stock of all the airlines up(a) especially Jet airways because it will open doors for other airlines for merger with other foreign airlines and would attract FDI which in turn will lead to growth and development of our economy. It would ease the pr essure of high current account shortfall in long run because if more and more dollars will mix in form of FDIs in India, than rupee will apprize in terms of dollar.