Sahara back in the cockpit as merger with Jet falls through

The Rs2,300-crore acquisition of Air Sahara by Jet Airways collapsed at midnight, five months after the mega civil aviation M&A deal was first announced as the Sahara took back control of Air Sahara operations. The airline was being virtually run by Jet Airways for the past few months.

In January this year Jet had announced the $500-million deal, which if it had materialised would have created India's largest airline, combining Jet's 35-per cent market share and Sahara's 9 per cent. But it fell through due to a combination of procedural delays and disagreements between the two airlines.

There was no formal announcement from Jet Airways after a one-line communiqué to the media, yesterday stating, "Jet Airways wishes to clarify that it is still awaiting all the regulatory approvals and the fulfillment of all conditions precedent."

Sahara had offered to extend the deadline for completing the transaction by 15 days but had refused to renegotiate the value of the transaction, which Jet wanted to be reduced by 10-20 per cent.

The absence of regulatory clearances had also affected the completion of the deal, as the directorate general of civil aviation had withheld clearance for Naresh Goyal to join the board of Air Sahara, though four other directors of Jet Airways had been granted secured clearance to join Sahara's Board.

Government approval is mandatory for all appointments to the boards of airlines and telecommunication services companies, considered of strategic interest, after they were opened to foreign investment.