Virgin Australia wins FIRB approval for Tiger takeover
29 May 2013
Australia's Foreign Investment and Review Board (FIRB) yesterday gave apporoved the proposed acquisition of a controlling 60-per cent stake in Tiger Airways Australia Pty Ltd, a subsidiary of Singapore's Tiger Airways Holdings, by the country's second-largest airline Virgin Australia Holdings Ltd (Virgin Australia).
The approval clears a major hurdle in Virgin Australia's months-long efforts to takeover budget carrier Tiger Australia.
In March, the country's competition regulator ACCC postponed its decision on the deal on the grounds that the combined entity could result in muted competition in the Australian domestic airline market.
Welcoming the FIRB's confirmation, Virgin Australia said, ''This confirmation satisfies another condition for the proposed acquisition of Tiger Australia, which will enable Virgin Australia to access the budget market segment and expedite the growth of Tiger Australia.''
The proposed transaction still remains subject to certain conditions and Virgin Australia expects the transaction to complete by mid-July, the company said.
Brisbane-based Virgin Australia has been vying with rival Qantas Airways for a larger chunk of the Australian domestic market. In October, the carrier agreed to acquire loss-making Tiger Australia for $35 million. At the same time, it had also made a $96-million cash-and-stock offer for regional carrier Skywest Airlines Ltd.
The acquisitions will help Virgin Australia to compete with Qantas' budget carrier Jetstar and its regional airlines QantasLink.
Melbourne, Victoria-based Tiger Australia is primarily a low-cost carrier which entered the Australian airline market in 2007. Tiger Airways Holdings is 33-per cent owned by Singapore Airlines. The Australian subsidiary has not churned out any profit since it began operation six years ago.
On completion of the deal, Brisbane-based Virgin is set to expand its fleet to 139 aircraft and will have a workforce of over 9,000.
The companies had said that they will spend up to $62 million on increasing Tiger's fleet from 11 to 35 by 2018, as part of the growth plan.
Last month, the company successfully completed the 100-per cent acquisition of Skywest. The acquisition provides Virgin Australia with the assets and capabilities to fast-track its advancement into the growth fly-in-fly-out and regional markets.