The MAHARAJA bids TATA to government: Sale bid finalised
Tata Sons has won the final bid for acquiring national carrier Air India, as per government sources. This comes a day after the government finalised the minimum reserve price for the cash-strapped airline.
While SpiceJet promoter Ajay Singh had also submitted a bid for the airline, government sources have confirmed that Tata Sons submitted a higher offer for acquiring the airline.
According to the sources, Central government's Group of Ministers (GoM) led by Union Home Minister Amit Shah headed by Home Minister Amit Shah has approved the winning bid for the national airline. Union Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Aviation Minister Jyotiraditya Scindia are also members of the committee.
The share purchase agreement (SPA) was given to the bidders in the meeting recently and the process will start after a formal announcement is made, following its approval by the Shah-led ministerial committee.
"The process of transfer will start with the SPA and the target is to completely hand over the airline to the new owners in around four months of time," a ministry official said.
"The approved bidders will have to deposit a minimum of 15 per cent of the bid amount," the official said.
Air India's reserve price was fixed after the bids were called to ensure that the bidders do not get to know about the reserve price prior to their bidding. It ensured utmost confidentiality when it comes to the reserve price.
Former Air India director Jitendra Bhargava recently told Bloomberg TV that the Tatas are will get a nod from the government as they have the capability to pour in a large amount of money required to revamp the national carrier.
“Tatas have been very, very passionate about Air India," Bhargava said.
FUTURE PLANS
While the specifics of the bid submitted by Tatas is not yet completely clear, it is believed to include an indemnity clause to prevent any unexpected claims that arise later.
More than 200 Tata Group personnel have been involved in the process, including M&A specialists from units such as Vistara, AirAsia India, Tata Steel and Indian Hotels. It may be noted that the Tatas are planning to merge all their airline business under one entity if it successfully bids for Air India.
The Tatas have already conducted extensive due diligence involving three teams from AirAsia India, TCS and other external consultants. The group has also formed a separate company Talace Private Limited to participate in the Air India acquisition process.
It is worth mentioning that the bid for the national carrier was sought at enterprise value instead of equity value. This is because the government had changed the bidding parameter for Air India.
After the acquisition, the Tata group will have to pump in a substantial amount of money to help the airline recover from its financial woes.
Air India's total debt surged significantly over the past two years due to the Covid-19 pandemic and stands at over Rs 40,000 crore as of now. However, the government plans to hand over the airline with a debt of Rs 23,000 crore to the Tatas.
The government will divest its 100 per cent stake in Air India, Air India Express and 50 per cent stake in ground handling company AISATS.
Tata Sons has won the final bid for acquiring national carrier Air India, as per government sources. This comes a day after the government finalised the minimum reserve price for the cash-strapped airline.
While SpiceJet promoter Ajay Singh had also submitted a bid for the airline, government...
Tata Sons has won the final bid for acquiring national carrier Air India, as per government sources. This comes a day after the government finalised the minimum reserve price for the cash-strapped airline.
While SpiceJet promoter Ajay Singh had also submitted a bid for the airline, government sources have confirmed that Tata Sons submitted a higher offer for acquiring the airline.
According to the sources, Central government's Group of Ministers (GoM) led by Union Home Minister Amit Shah headed by Home Minister Amit Shah has approved the winning bid for the national airline. Union Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Aviation Minister Jyotiraditya Scindia are also members of the committee.
The share purchase agreement (SPA) was given to the bidders in the meeting recently and the process will start after a formal announcement is made, following its approval by the Shah-led ministerial committee.
"The process of transfer will start with the SPA and the target is to completely hand over the airline to the new owners in around four months of time," a ministry official said.
"The approved bidders will have to deposit a minimum of 15 per cent of the bid amount," the official said.
Air India's reserve price was fixed after the bids were called to ensure that the bidders do not get to know about the reserve price prior to their bidding. It ensured utmost confidentiality when it comes to the reserve price.
Former Air India director Jitendra Bhargava recently told Bloomberg TV that the Tatas are will get a nod from the government as they have the capability to pour in a large amount of money required to revamp the national carrier.
“Tatas have been very, very passionate about Air India," Bhargava said.
FUTURE PLANS
While the specifics of the bid submitted by Tatas is not yet completely clear, it is believed to include an indemnity clause to prevent any unexpected claims that arise later.
More than 200 Tata Group personnel have been involved in the process, including M&A specialists from units such as Vistara, AirAsia India, Tata Steel and Indian Hotels. It may be noted that the Tatas are planning to merge all their airline business under one entity if it successfully bids for Air India.
The Tatas have already conducted extensive due diligence involving three teams from AirAsia India, TCS and other external consultants. The group has also formed a separate company Talace Private Limited to participate in the Air India acquisition process.
It is worth mentioning that the bid for the national carrier was sought at enterprise value instead of equity value. This is because the government had changed the bidding parameter for Air India.
After the acquisition, the Tata group will have to pump in a substantial amount of money to help the airline recover from its financial woes.
Air India's total debt surged significantly over the past two years due to the Covid-19 pandemic and stands at over Rs 40,000 crore as of now. However, the government plans to hand over the airline with a debt of Rs 23,000 crore to the Tatas.
The government will divest its 100 per cent stake in Air India, Air India Express and 50 per cent stake in ground handling company AISATS.
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