Singapore Airlines - Maybank Research 2024-09-02: Clearing The Final Hurdle For Merger Of Vistara & Air India

• Singapore Airlines (SIA) said it has received approval from the Indian government for foreign direct investment (FDI), as part of a merger in which Vistara, its 49%-owned JV with Tata, will be absorbed into Air India.
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Expects the deal to be completed by end-2024

• The FDI approval, together with anti-trust and merger control clearances, as well as other governmental and regulatory approvals received to date will clear a significant hurdle towards the completion of the deal.
• The parties are in discussions to extend the Long Stop Date (previously indicated as 31 Oct 2024) to accommodate the latest expected transaction completion date.
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But more investment may be required

• SIA will swap its 49% stake in Vistara and inject a further INR20,585m (US$247m) in return for a 25.1% direct stake in the enlarged entity. SIA and Tata Sons have also agreed to participate in an additional capital-injection exercise into the enlarged Air India after the completion of the merger, to fund the growth and operations of the enlarged Air India. The capital injections will be on a pro-rata basis.
• SIA’s pro-rata share of 25.1% of the additional capital injection would be up to INR50,200m (US$600m), based on its current agreement with Tata Sons.

Regional competition is catching up rapidly

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Eric Ong Maybank Research | https://www.maybank-ke.com.sg/ 2024-09-02 SGinvestors.io

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