Shares of Deccan, UB Holdings surge on merger

MUMBAI: Shares of Vijay Mallya-led United Breweries Holdings and low-cost carrier Deccan Aviation on Thursday reacted positively to the news that both the companies would create a single corporate entity to cut down operational costs and increase profitability.

Deccan Aviation opened at Rs 301.20, a jump of 2 per cent from Wednesday's close. The scrip gained further momentum and witnessed an intra-day high of Rs 315, a gain of Rs 19.70 and over 16.70 lakh shares got traded on Bombay Stock Exchange.

Shares of United Breweries Holdings opened firm at Rs 1,125, up 3.73 per cent over yesterday's closing price. The scrip later touched an intra-day high of Rs 1,155, a gain of Rs 70.45 and over 30,000 shares changed hands on the BSE.

The boards of the two private airlines at a joint meeting on Wednesday decided after management consulting firm Accenture in its report recommended their merger for greater operational and marketing synergies.

"It (Deccan and Kingfisher) will be one company, and eligible to fly (internationally) in 2008," Mallya said. He added that one of the key elements of the Accenture report is route rationalisation between the two airlines.

Liquor baron Mallya's UB Group had earlier this year acquired 46-per cent stake in Deccan Aviation Ltd, becoming its single largest shareholder.

Mallya would be the chairman and CEO of the merged entity, while executive chairman of Deccan, Captain GR Gopinath would be the vice-chairman.