merger final
TRANSCRIPT
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)
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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
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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
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HOT DEALSMittal- ArcelorSBI- GEICICI- Sangli BankUnited Breweries- Shaw WallaceTata- CorusJet- SaharaLIC may buy UTI Bank
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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
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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
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Did Jet Airways pay too much for Air Sahara???
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To defend the dominance of Indian Skies
New Players Explosive 20-25% growth for industry.But Jet’s share declined from 42% to
37%
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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.
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This is not a market share game ,but of infrastructure.
Substantial cost reductions.Staffing issues.
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Advantages Jet will get from the deal.