|Mumbai, June 1, 2007- Further to a week of intense negotiation and subsequent agreement, the Board of Deccan Aviation Ltd., has approved the allotment of equity shares amounting to 26% of the expanded paid up capital of the company to United Breweries Holdings Ltd., and its nominees. The new shares will be allotted at Rs.155 per share representing approximately a 10% premium to the current market price of the shares of Deccan Aviation Ltd.
An initial investment of Rs.150 crores into Deccan Aviation Ltd. has already been made against which shares will be allotted and further investments of Rs.396 crores are to be made before the end of June.
When this investment process is complete, the UB Group will become the largest single shareholder in Deccan Aviation Ltd., and will be entitled to nominate 3 Directors on the Board. The Board will comprise 12 Directors with 3 Directors being nominated by the UB Group, 3 will be nominated by the original promoters/institutional shareholders and the remaining 6 will be independent Directors to be nominated jointly by the UB Group and the current promoter and institutional shareholders. While Captain G.R. Gopinath will continue as Executive Chairman, a new CEO will be appointed reporting directly to the Board of Directors.
United Breweries Holdings Ltd. will make an open offer to acquire minimum of 20% to all shareholders of Deccan Aviation Ltd. at a price of Rs.155/- in compliance with SEBI regulations.
Kingfisher Airlines and Air Deccan will, henceforth, work very closely together to exploit the significant synergies that exist in the areas of operations and maintenance, ground handling, vastly increased connectivity, feeder services, distribution penetration etc.
The Kingfisher-Air Deccan group will be the largest domestic airline with a fleet of 71 aircraft including 41 Airbus aircraft and 30 ATR aircraft. This combined airline powerhouse will cover all segments of air travel from low fares to premium fares and offer the maximum number of 537 daily flights covering the single largest network in India connecting 69 cities whilst taking advantage of unparalled synergy benefits arising from a common fleet of aircraft.
For the near future, Kingfisher will continue to serve the corporate and business travel segment while Air Deccan will focus on serving the low fare segment but with improved financial prospects for both carriers.
Commenting upon this ground breaking transaction, Captain G.R. Gopinath said "initially when Dr. Mallya publicly said that he was interested in Air Deccan, I did not take it too seriously as I thought that he wanted to buy the whole airline which was not for sale. However, when all the available synergies between Kingfisher and Air Deccan were examined more closely, it became clear that coming together would make enormous financial and operational sense. Besides this, UB were happy with a lower shareholding which I originally perceived to be a minimum of 51%. With UB now set to become the largest single shareholder, they have demonstrated their commitment to exploiting the enormous synergies that exist between Kingfisher and Air Deccan. The 2 airlines will operate as a group whilst maintaining their individual identities for the near future. I think that Dr. Mallya and myself can do wonderful things together and build huge shareholder value with our respective teams".
Dr. Vijay Mallya, Chairman of the UB Group stated "when I launched Kingfisher Airlines in 2005, I made a statement that I would build India`s largest domestic carrier by 2010. With this strong financial and operational alliance between Kingfisher and Air Deccan, and our significant management participation, I have succeeded in creating an Airline Group with the largest domestic fleet, network and market share co-leadership in just over 2 years. This will be welcomed by the entire aviation industry as it`s a very significant move towards much needed consolidation. The back-end operational synergies are enormous which will have a positive financial impact on both Air Deccan and Kingfisher and further improve the competitive position of the group in the fast growing aviation industry in India.
For further details about the UB Group, please visit www.theubgroup.com