Bangalore, May 31: Three weeks ago, reacting to reports of a possible acquisition of his low cost airline by the flamboyant Vijay Mallya’s premier Kingfisher Airlines, Air Deccan managing director Captain G R Gopinath had remarked, “He (Mallya) is from Mars and we are from Venus. Air Deccan is not for sale.”

Mars and Venus officially found a meeting ground on Thursday with Mallya’s UB Holdings picking up a 26 per cent stake in Air Deccan at a cost of Rs 550 crore, marking the third major merger in the Indian civil aviation space this year.

Following a meeting of the board of Deccan Aviation Ltd, the company that runs the low-cost Air Deccan, on Thursday evening, Gopinath announced the sale of 26 per cent of the stake in the airline to UB Holdings, a part of Mallya’s United Breweries Group.

“We have received an advance of Rs 150 crore today and the balance amount will come in four weeks. This has triggered an open offer,” Gopinath said. The deal would be closed through allotment of 3.52 crore fully paid-up equity shares, valued at Rs 155 a share, to UB, he said. The new shares will be issued at a premium of Rs 8.80 or 6 per cent over Air Deccan’s closing price of Rs 146.20 on NSE on Thursday.

The Kingfisher Airlines-Air Deccan combine will now have a fleet of 71 aircraft, 70 destinations and 33 per cent market share, Gopinath stated. “We (Air Deccan) will continue to be an independent identity and pursue our low-cost business model. Our combined market share will go up to 33 per cent — Air Deccan 22 per cent and Kingfisher 11 per cent,” he said. Under the new arrangement Gopinath will remain executive chairman of the Deccan Aviation board, while Vijay Mallya will be the vice chairman.

Gopinath said Air Deccan initially rejected Mallya’s offer since the merger of a full service airline and low cost carrier had never worked successfully anywhere in the world. “I mistook him. Mallya came back and said he wants to invest and he would make the best offer. If we would have gone with any others, there would have been bloodbath in the markets,” he remarked.

“It makes enormous financial and economic sense and in the interest of long-term vision and synergy that can evolve with Kingfisher in terms of engineering, inventory management and ground handling resources, it was the best option before Air Deccan,” Gopinath said.

“Starting next Monday, a team of officials from Air Deccan and Kingfisher Airlines will look at ways to collaborate and combine to increase operational efficiency and decrease costs,” he said.

Air Deccan began operations in August 2003. It recorded a net loss of Rs 213.17 crore on revenue of Rs 437.82 crore for 2006-2007. The company raised nearly Rs 400 crore through an initial public offer (IPO) in May 2006.