Etihad Air may have to make open offer for Jet Airways stake

The deal for Dubai-based Etihad Airways to buy a stake in India's Jet Airways may yet hit a bump, as the Securities & Exchange Board of India wants Etihad to issue an open offer for shares - but the Abu Dhabi government is concerned about the financial disclosures required for an open offer, according to a CNBC-TV18 report.

The deal has been grounded on one controversy or the other. The market regulator now feels that an open offer needs to be made because there was a difference of opinion from the time that this deal was struck.

One part of the legal community believed that it was not necessary for Etihad to make an open offer, but another part believed that Etihad would need to make an open offer, because in a sense this was joint control; they were acting in concert.

There is a very strong possibility that SEBI will indeed formally announce a mandatory open offer for 26 per cent of the outstanding capital of this company, triggered under its rules.

The regulator has made no official comment yet on the matter.

The key angle is a shift from sole control of an individual promoter - Jet's Naresh Goyal - to joint control. The conclusion at this stage is based on some of the discussions and details that are out in public domain.

The view within SEBI is that this indeed would require an open offer being triggered.

This is a regulatory procedure because of changes that are to be made to the articles of association, certain issues with the right of first refusal and some other matters which will be triggered.

Abu Dhabi and Etihad both have difficulties with regards to the financial disclosures that are required to be made under such a deal.

For now it seems that an open offer is indeed on its way, the CNBC-TV18 report suggests.