Singapore Airlines (SIA) has received approval from the Indian government for foreign direct investment (FDI) into the enlarged Air India.
On Nov 29, 2022, SIA and its 49%-associated company, Tata SIA Airlines, agreed to merge Air India and Vistara. The agreement was entered into with Tata Sons, Talace and Air India on the same day.
Vistara is a joint venture (JV) between TATA Sons and SIA established in 2013. Tata Sons holds a 51% stake in the JV while SIA holds the remaining 49%. Tata Sons is the principal holding company of the Tata Group while Talace is a wholly-owned subsidiary of Tata Sons. Air India is a wholly-owned subsidiary of Talace.
Under the proposed merger, SIA invested INR20.58 billion ($360 million at the time) in Air India as part of the transaction. The investment will give SIA a 25.1% stake in the enlarged Air India group. In its November 2022 statement, SIA said that the investment will be funded with its internal cash resources.
According to SIA in its Aug 30 release, the FDI approval, including the anti-trust and merger control clearances and approvals, as well as other governmental and regulatory approvals received to-date, represent a significant development towards the completion of the proposed merger.
The proposed merger is expected to take place by the end of 2024. All parties are said to be in discussions to extend the long stop date to accommodate the latest expected completion date. The long stop date was previously indicated as Oct 31.
See also: SIA to adjust conversion prices of 1.625% convertible bonds due 2025 after interim dividend
Shares in SIA closed at $6.21 on Aug 30.
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