Vijay Mallya-led UB Group, which has acquired 26 per cent in Deccan Aviation, on Wednesday made an open offer to shareholders of the company to buy an additional 20 per cent stake for about Rs 420 crore.
Kingfisher Radio, a wholly-owned subsidiary of United Breweries Holding, made the offer for acquiring 2.70 crore shares of Deccan Aviation at a price of Rs 155 per share.
The offer, which is being managed by Edelweiss Capital, would open from July 25 and close on August 13, the company said.
UB group plans to utilise a combination of internal accruals and borrowed capital to fund the acquisition.
UB Holdings had on May 31 announced acquisition of 26 per cent stake in Deccan Aviation for Rs 546 crore. The company had made an initial investment of Rs 150 crore in the low-cost carrier and a furtnnouncement, in case requisite approvals are not received from shareholders, the agreement for the acquisition would be cancelled and the Rs 150 crore advance paid would have to be refunded.
With the acquisition, the Kingfisher-Air Deccan combine would have the largest fleet of 71 aircraft — 41 Airbus and 30 ATR aircraft – in the domestic market.
Shares of Deccan Aviation closed at Rs 143, down 0.03 per cent, while UB Holdings ended at Rs 637.60, up 2.11 per cent, on the Bombay Stock Exchange on Wednesday.
The company has also entered into a shareholders agreement with promoters G R Gopinath, K J Samuel and Vishnu Rawal along with their associatnges in Memorandum and Articles of Association of the company.
Gopinath would be the executive chairman of the board of director but would not be able to cast his vote. Mallya would be appointed as Vice Chairman of Deccan Aviation.
UB group firm holds the right of first refusal in case the promoters want to sell more than five per cent of their stake in Deccan Aviation.
Interestingly, the open offer is not conditional to any minimum number of shares tendered in or accepted but is subject to Deccan Aviation shareholders approval.
Source : DNA India