UB group, Mallya to own 69 pct of Deccan post merger

MUMBAI (Reuters) - Spirits maker UB group and its founder Vijay Mallya will together own about 69 percent of Deccan Aviation Ltd, to be renamed Kingfisher Airlines, after the merger of the two airlines, a top UB group official said.

UB group will own 60.6 percent and Mallya and his entities 8.4 percent in the company, UB group Chief Financial Officer Ravi Nedungadi said over telephone.

UB group now holds about 49 percent of Deccan, a budget airline, and almost the entire stake in unlisted Kingfisher Airlines.

Late on Thursday, Deccan's board approved the issue of three shares for every seven held in Kingfisher Airlines as part of merger of the latter's airline operations with itself.

Nedungadi, however, declined to spell out the valuation of the merged entity. "There was no absolute valuation presented to us. The reports gave us relative values for the share swap," he said.

KPMG and Dalal and Shaw recommended the share swap ratio.

The merged airline, which will operate two brands -- Kingfisher, a full service carrier and Deccan, a budget airline -- is ridden with a combined loss of more than 20 billion rupees and has said it plans to sell shares worth up to $300 million.

"The share swap was a major step in new capital structure. We will simultaneously look at raising the money," Nedungadi said.

The merger creates one of the biggest airlines in the country with a market share close to a third. Deccan will also complete five year of operations in mid-2008 allowing it to fly abroad.