The acquisition of Air Works MRO by Adani Group has been delayed due to the liquidation of a major shareholder in the target company.
According to ET, an MoU was signed between the Adani Group and Air Works to finalize the acquisition deal. Still, it has been delayed due to a major shareholder of Air Works being forced into liquidation.
Adani Air Works Deal Faces Delays
The MoU has already expired twice, and the latest deadline for the deal’s closure was set in Q4 of FY23. Adani Defence Systems & Technologies, a subsidiary of the Adani Group, had agreed to acquire Air Works for Rs 400 crore in October of last year.
According to an individual familiar with the matter, the Adani Group’s acquisition of Air Works MRO has not been finalized due to the liquidation of one of the company’s major shareholders, Punj Lloyd Group, which holds a 23% stake.
The Memorandum of Understanding (MoU) between the two entities has expired twice, with the latest deadline in Q4 of FY23. Furthermore, the Adani Group had agreed to acquire Air Works for a total value of Rs 400 crore. Through its subsidiary, Adani Defence Systems & Technologies, in October of last year.
The individual noted that Air Works has been unable to resolve the issue. Despite the delay, the Adani Group remains interested in the MRO company.
According to a source familiar with the matter, the acquisition deal is approaching completion and is expected to be finalized soon.
Over the last three months, the Adani Group’s listed entities have faced a significant decline of over $100 billion in market value. The fall came after allegations of ‘misgovernance,’ ‘fraud,’ and stock price ‘manipulation’ were made against the conglomerate by US short-seller Hindenburg Research. Despite these allegations, the Adani Group has repeatedly refuted them.
About AirWorks MRO
The group has recently completed 73 years of operations. Now let’s see some background about it.
Air Works was founded in 1951 by P S Menon and B G Menon. It is in 27 cities nationwide, including Mumbai, Hosur, and Kochi.
The Adani Group’s acquisition of Air Works is intended to provide a foothold in the aviation maintenance industry. Subsequently, complement the conglomerate’s civil aviation portfolio.
The group aims to expand its business in two ways: by purchasing more airports and entering various segments of airport services, such as MRO, ground handling, and duty-free stores.
The Adani Group operates the Mumbai airport. Furthermore, they use Airports in Ahmedabad, Lucknow, Thiruvananthapuram, Jaipur, Guwahati, and Mangalore.
According to a Deloitte report from November 2021, the Indian MRO industry is projected to expand from $1.7 billion in 2021 to $4 billion by 2031, with a CAGR of 8.9%.
Indian airlines typically meet their aircraft maintenance needs abroad. However, the government has now eased taxation norms for the MRO sector.
In March, it lowered the GST on domestic MRO services from 18% to 5%, attracting new companies. Furthermore, Safran Engineering announced in July that it is investing up to $200 million in an MRO facility in Hyderabad. At the same time, the government is also seeking to privatize AI Engineering Services by early 2023.
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