The Jet-Etihad deal has hit an air pocket as neither Jet nor Etihad are willing to compromise on their stance, reports CNBC-TV18‘s Kritika Saxena quoting sources.
The Jet-Etihad deal has hit an air pocket as both the companies are not willing to compromise on their stance, reports CNBC-TV18's Kritika Saxena quoting sources.
Etihad wants to make an India investment in order to leverage that to expand in the international market. It has been asking and pushing rather seriously for a large control in terms of management operations and even in terms of financial involvement in Jet Airways. Sources add that the promoters for Jet Airways are not willing to give in and are looking for minimal interference as far as the operational and management involvement is concerned.
It is learnt that Jet Airways board was to meet last week, but the deal has been in serious jeopardy ever since Etihad board met. The board is not happy with the fact that the promoters are not willing to give the right of first refusal (RoFR) agreement.
Earlier it was reported that Etihad has been asking for a RoFR agreement in the share purchase agreement wherein the RoFR clause will allow Etihad to look at expanding and hiking the stake to around 49 percent.
Sources also add that the Etihad board has expressed the option of probably looking at a secondary sale and an open offer within the 49 percent foreign direct investment (FDI) limit. However, considering the fact that FDI regulations will not allow a majority in terms of board seats and in terms of the overall financial contour as well this could be a major threat to the deal as a whole.
No official confirmations have been made, but sources say that the deal is in serious jeopardy. Etihad at a later date may explore to revive talks but from Etihad’s side if the demands are not met it is unlikely that they will go ahead and sign the term sheet.