Merger Final

Presented by:

Gurpreet Singh(08-MBA-06)Namrata Soodan(12-MBA-06)

Sonali Raina(29-MBA-06)Sahina Sethi(24-MBA-060Varun Abrol(37-MBA-06)

INDIAN AVIATION INDUSTRY

Domestic market: current scenario

Indian 21% Air Sahara

11%

Air Deccan 19%

Jet Airways Kingfisher Others 34% Go Air SpiceJet Airlines 1%

2% 6% 8%

Full-service carriers: 72% share

(Jet Airways, Indian, Air Sahara, Kingfisher Airlines)

No-frills carriers: 28% share

(Air Deccan, SpiceJet, Go Air)

6 6

20 20

Corporate Strategies in M&A

Why? • Gain market share• Economies of scale• Enter new markets• Acquire technologies• Strategic Benefit• Utilisation of surplus funds• Managerial Effectiveness• Integrate vertically

20 20

Corporate Strategies in M&A

Exploit market power, economies of scale & scope, and market inefficiencies

Same industry/Same market- Consolidation

Related industries- Horizontal-Jet-Sahara

Same industry/Different market(Conglomerate)-LIC-UTI Bank

Suppliers-Vertical-ITC

20 20

HOT DEALSMittal- ArcelorSBI- GEICICI- Sangli BankUnited Breweries- Shaw WallaceTata- CorusJet- SaharaLIC may buy UTI Bank

20 20

Air Sahara in Jet Air Fold

Deal for Rs 1450 crore, 40% less than the deal in Jan’ 2006.The merged entity will have a market share of 42% (largest domestic private )Buyout helps Jet Air to go International.

Abstract

20 20

20 20

Chronological Events in the deal

• JAN 19, 2006• JUNE 20, 2006• JUNE 21, 2006• JUNE 22, 2006• SEPT 22, 2006• APR 12, 2007• APR 16, 2007• APR 20, 2007

20 20

Did Jet Airways pay too much for Air Sahara???

20 20

To defend the dominance of Indian Skies

New Players Explosive 20-25% growth for industry.But Jet’s share declined from 42% to

37%

20 20

Regaining the dominance…Three dimensions to dominance…

1.Increase in market share2.Control over a substantial part of available

airport infrastructure.3.The only private player to fly international.

20 20

This is not a market share game ,but of infrastructure.

Substantial cost reductions.Staffing issues.

20 20

Advantages Jet will get from the deal.