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SIA-Tiger deal gets nod from competition commission

Friday, November 28, 2014 - 18:46
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THE Competition Commission of Singapore (CCS) has given Singapore Airline's (SIA) proposed acquisition of Tiger Airways Holdings Limited (Tigerair) its blessing.

THE Competition Commission of Singapore (CCS) has given Singapore Airline's (SIA) proposed acquisition of Tiger Airways Holdings Limited (Tigerair) its blessing.

On Friday, CCS said that the deal would not run afoul of the Section 54 prohibition of the Competition Act, as Tigerair is "likely to exit its operations in the absence of the proposed transaction".

Section 54 of the Act prohibits mergers that have resulted, or may be expected to result, in a "substantial lessening of competition in Singapore".

SIA currently holds 40 per cent of Tigerair. As part of the proposed deal, SIA will convert all the perpetual convertible capital securities it holds in Tigerair into new shares in the latter, raising its stake to about 56 per cent. Consequently, Tigerair will become a subsidiary of SIA. On top of that, SIA's stake in the ailing firm could rise to up to 71 per cent if a proposed rights issue by Tigerair comes to pass.

The competition commission concluded that the proposed deal would be "less detrimental to competition in Singapore as compared to the scenario where Tigerair Holdings exits its operations".

It also noted that without this deal, Tigerair's resulting exit "would cause disruptions to passengers and to the connectivity of the Singapore air hub".

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