Tata Sons chairman N Chandrasekaran, who was the prime mover of a deal to acquire struggling Jet Airways, is believed to have decided to go slow after a few directors in the group holding company expressed reservations at the board meeting. The board is expected to meet again in the third week of December and these directors have indicated that they would like to have more details about the deal by then. While no one in the Tatas is saying the deal is off, there is a sense that Chandrasekaran, who had perhaps hoped for at least an in-principle nod from the board, may have lost some of his earlier enthusiasm.
Bailout package unlikely for Jet
Virtually ruling out the possibility of a bailout package for Jet Airways, civil aviation minister Suresh Prabhu has said a private airline’s management must ensure the carrier functions properly. An official said the aviation ministry would not intervene in Jet’s plea for time to pay airport operators as such matters need to be dealt with by the two entities.
Tatas experience with Goyal may queer the pitch
There is also a perception that more than the possible pitfalls of such an M&A, it is the fraught history the Tatas have with Jet’s founder Naresh Goyal that may queer the pitch. Goyal is widely thought to have lobbied behind the scenes to thwart the Tata Group’s attempts to re-enter aviation in alliance with Singapore Airlines (SIA) back in the 1990s and early 2000s. The memory of that still rankles some old-timers at Bombay House, who aren’t overly keen to “bail out” Goyal. For Goyal and Jet, a slowdown - or worse, reversal of the acquisition process - would be bad news. The Jet stock, which had soared 40% over the past few days in anticipation of a transaction, fell nearly 7% to close at Rs 323 on Monday. The airline, in which Goyal and Abu Dhabi’s Etihad are the two largest shareholders with 51% and 24% respectively, is staring at financial defaults in the coming days.
There is an emerging view that the Tatas may wait to see if Jet, in the absence of any deal, ends up in insolvency court - and then bid for it, without having to negotiate with Goyal.
