Jet's Sahara acquisition clears a hurdle

Union ministry of company affairs gives green signal to Jet Airways

BY A CORRESPONDENT
March 2006

Union Ministry of Company affairs has cleared Jet Airways of Air Sahara under the Companies Act. In January, Jet Airways had announced the acquisition of smaller rival Air Sahara for a sum of $500 million (about Rs 2300 crore).

Prominent Indian financial daily Business Line on Saturday reported that the ministry gave aproval to the acquisition under the Companies Act 1956. The Act mandates ministry approval if the stake in the acquired company crosses 25% of the paid-up capital.

The Competition Act which is supposed to govern takeovers and stem monopoly moves is yet to be notified. So, the deal will not have to go under such a scanner. During Jet Airways acquisition of Air Sahara, there were concerns that the huge marketshare, airport bays and overseas rights accruing to Jet Airways by virtue of its Air Sahara takeover will create a monopoly.

Now, the ball passes to the Registrar of Companies, which will take up Jet Airways application. The Union Civil Aviation Ministry and the Directorate general of Civil Aviation (DGCA) are also expected to vet the takeover proposal before the acquisition is formalized.