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Saturday, June 02, 2007

Kingfisher buys 26% in Deccan Aviation

King of good times Vijay Mallaya has acquired 26 per cent stake in India's first low cost carrier Deccan Aviation at Rs 550 crore.

UB Group has paid an advance of Rs 150 crore and the balance will be paid in next four months. The Group has offered to pay at Rs 155 per share for a total of 3.5 million shares.

"The 26 per cent stake has been offered through allotment of new preference shares. None of the promoters has sold their shares," said Captain GR Gopinath, MD, Air Deccan.

The Deccan Aviation Board has approved Air Deccan to allow UB Group to invest 26 per cent in the low cost airline.

"In the interest of the long-term view, the synergy with Kingfisher will make enormous benefit for the company," said Captain Gopinath.

"We will continue to be the low cost business model. We will continue to operate as an independent entity," added Gopinath.

Captain Gopinath would continue to remain as the Executive Chairman of the Board, while Vijay Mallya would be the Vice Chairman.

Deccan Aviation is one of India's largest private sector charter aviation company with a network of bases spanning seven locations across the country.

With this acquisition, UB group will become the largest shareholder in Deccan Aviation. A formal announcement is expected later in the day.

"This will have a significant impact in the industry structure. The shareholders will stand to gain when Kingfisher gets listed on the bourses," said Kapil Kaul, CEO-India & Middle-East, Centre for Asia Pacific Aviation.

"It is a win-win situation for both, be it market share, landing rights. It is good for the investors as well," added Amitabh Chakraborty, President, Religare Securities.

The markets took note of the development and the stock at Rs 146 levels zoomed 12 per cent in noon deals on Thursday.

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