Mumbai: India’s second largest budget carrier SpiceJet Ltd rose the most in more than six-and-a-half years following a report that Kingfisher Airlines Ltd may acquire its shares in an all-cash takeover.
SpiceJet gained 22%, the most since 14 December 2001, to Rs30.45 at the close of trading in Mumbai after The Economic Times reported on 5 July that Kingfisher chairman Vijay Mallya is in talks to buy 26.33% of SpiceJet from Gulf-based fund Istithmar World PJSC and UK-based BS Kansagra.
Higher fuel costs, the biggest expense for airlines, and increased competition in India’s aviation sector, led carriers to post losses over the past year, prompting mergers among the airlines. Mallya bought control of India’s biggest budget carrier, Deccan Aviation Ltd, in 2007. Deccan shares posted a record gain—24%, the most since its trading debut in June 2006, to Rs72.45 on Monday.
Mallya’s purchase of the stake in SpiceJet would trigger a mandatory offer for an additional 20% of the shares, The Economic Times said. SpiceJet had declined 71% this year.
Ajay Singh, a director of New Delhi-based SpiceJet, didn’t return phone calls seeking comment on the transaction. Dubai-based Istithmar World’s vice-chairman Adel Al Shirawi declined to comment. Istithmar is the largest shareholder in SpiceJet.
SpiceJet has appointed a financial adviser to arrange for new funds, it said in a statement to the Bombay Stock Exchange on Monday after the market closed. Its board didn’t discuss any issues reported in the newspaper article at a meeting on 30 June, it said.
Deccan was the best performer on the BSE500 Index on Monday, followed by SpiceJet.
Arif Sharif in Dubai contributed to this story.