The Telegraph
Since 1st March, 1999
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Merger undone in mid-air

June 21: The Jet-Sahara merger is as good as off.

Jet did not respond to Sahara’s offer to extend the deadline for consummating the merger agreement, which expired at midnight, by 15 days.

Making the offer earlier in the evening, Sahara had said it would resume operating on its own from tomorrow if there was no response by midnight.

Air Sahara president Alok Sharma said the airline “will not renegotiate the price... But if they (Jet) want extension of deadline, we are open to increase by another 15 days”.

“We have not got regulatory clearances and this held back the completion of the deal,” Sharma said.

Till late tonight, Jet chief Naresh Goyal had not been given security clearance by the government to join the Air Sahara board. But this, though a factor, is seen as an excuse for Jet to walk out on the deal because it now believes the price of Rs 2,300 crore it had agreed was too high.

It wanted to hammer the price down ' by 10-20 per cent ' to which Sahara did not consent.

Wrapping up the news conference, Sharma said: “Wish us luck, Air Sahara is on its own from tomorrow.”

Jet’s share rose on possibility of the deal coming undone to Rs 705.70, up 5.10 per cent on the day. Other airline shares also went up.

Sahara’s statement capped a day of legal steps taken by both sides to protect their interests.

Sahara informed a Lucknow court Jet had terminated the deal. Owned by Subroto Roy, Sahara secured an interim order restraining Jet till June 23 from withdrawing any money from the escrow account that had been opened when it agreed to buy Sahara.

Jet moved Bombay High Court seeking a similar restraint on Sahara, saying it had failed to fulfil conditions in the agreement like transfer of airport infrastructure facilities and should be stopped from operating the account.

District judge (Lucknow) Shiv Charan Sharma restrained ICICI Bank, where the account had been opened, from making any payment to Jet. The court gave Jet time till June 23 to file objections to Sahara’s contention.

Sahara said Rs 1,500 crore was lying in the escrow account, but Jet told Bombay High Court that Rs 500 crore had been put there as advance for the purchase of Air Sahara.

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