Maran in pact to buy 37% in SpiceJet

The Financial Express had reported on Friday that Maran was back at the negotiating table for picking up a significant stake in the airline and that the deal was going to be announced shortly after it collapsed in April over valuation differences.

Singh,along with his family members,currently hold about 10% stake in the airline. Maran is expected to have agreed to pay Rs 47 a share to the sellers. Centre for Asia Pacific Aviation (CAPA) India head Kapil Kaul said Maran would launch the open offer at Rs 54-56. This,however,is still lower than SpiceJet’s Friday closing price of Rs 57.85 on the BSE.

At current market price,the airline is valued at around Rs 1,400 crore. The airline operates with a fleet of 20 B737 aircraft and commands a market share of 14.5% in India. Global consulting and auditing firm Ernst and Young advised the airline on the deal.

“The change in ownership would bring stability to the airline as shareholding has largely been fragmented,” Singh said. One of the main promoters,London-based businessman Bhulo Kansagra,owned nearly 12% stake in the airline. Kansagra has interests in mining,hospitality and real estate sectors. SpiceJet is considered one of the best airline in the country. It reported a net profit of Rs 61 crore in 2009-10,the first among the three BSE-listed airlines to post profit for the full financial year following the downturn.

“With the deal,SpiceJet will get stronger management. The new owner has deep pockets. Although Maran does not come with the experience of running a commercial airline,he is expected to get the right people,” Amadeus India managing director Ankur Bhatia said.

An industry watcher said Maran would be a game changer as he has got the unbeatable combination of cash,political clout and right management.

“The Indian aviation industry is entering into a strong and sustainable growth phase. Maran has entered the industry at the very right time,” Kaul said.