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VIRGIN Australia Holdings Limited (ASX: VAH) has proposed to acquire the remaining stake of Tigerair Australia for $1.
Acquiring the remaining 40 per cent of shares would see VAH secure 100 per cent ownership and control of Tigerair.
The joint venture between the companies commenced 8 July 2013 and the completion of the acquisition is expected for the end of this year.
VAH CEO John Borghetti says the acquisition would take the Tigerair fleet on short-haul international flights, but its domestic fleet will likely be reduced due to subdued demand.
“This proposed transaction marks an important milestone for Tigerair Australia and forms part of the Virgin Australia Group’s Virgin Vision strategy to 2017,” says Borghetti.
“Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the Tigerair Australia domestic fleet is likely to be reduced.
“Under this proposed acquisition, we will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016, by leveraging the resources of the wider Virgin Australia Group.”
The partnership between VAH and Tiger Holdings will continue into the future through brand licencing and certain services which will continue to be provided by Tiger Holdings direct to Tiger Australia.
The proposed acquisition is still subject to conditions precedent, including Foreign Investment Review Board approval, Tiger Holdings shareholder approval and entering into long-form licensing agreements, services agreements and other ancillary transaction documents.
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