Agencies

Bangalore, May 31: United Breweries (Holdings) Ltd. said on Thursday it will buy 26 percent of Deccan Aviation Ltd. for 5.5 billion rupees and launch an open offer for a further 20 percent.

United Breweries (Holdings), which runs Kingfisher Airlines, will pay 1.5 billion rupees upfront and 4 billion rupees within four weeks, G.R. Gopinath, managing director of Deccan Aviation, which runs budget airline Air Deccan, said at a news conference.

The two airlines will benefit by sharing airport infrastructure, ground handling and security but the savings have not yet been worked out, Gopinath said.

Deccan will issue 35 million new shares at 155 rupees each to United Breweries (Holdings), valuing the airline at about 21 billion rupees.

The two airlines will continue to be run under their respective identities for the "time being", Ravi Nedungadi, chief financial officer of the UB Group, said.

Gopinath will be the executive chairman of Deccan and Vijay Mallya, chairman of the UB group, will become the vice-chairman, Gopinath said.

The combine will have a 71-strong fleet comprising Airbus A320 and ATR turboprops and fly to about 70 cities and towns across the country.

The United Breweries (Holdings) stake acquisition in Deccan follows the merger of state-run Air India and Indian Airlines and Jet Airways Ltd.'s acquisition of Air Sahara.