Fair trade regulator Competition Commission of India (CCI) has approved the proposed acquisition of 3.33 per cent stake in Pipavav Defence and Offshore Engineering Company by Swedish defence firm SAAB AB.
Citing that the management and control of Pipavav would remain within its promoters, CCI said the proposed combination "is not likely to have an appreciable adverse effect on competition in India".
As per the deal, SAAB -- a global defence, aerospace and security company -- would purchase 2.45 crore shares representing 3.329 per cent stake in Pipavav.
According to the notice submitted by the two companies to the regulator, "SAAB shall only be a technology investor in Pipavav and the overall management control of Pipavav shall continue to remain with its promoters".
The proposed acquisition is in the nature of a "strategic technology partnership" whereby SAAB and Pipavav would jointly bid for projects.
"The proposed combination is... not an acquisition in the ordinary course of business or solely for the purpose of investment," CCI said.
Following the deal, the promoters of Pipavav would continue to be its largest shareholders, CCI said in order dated January 1, 2013.
In November, last year, Pipavav had announced that it will reach an agreement with SAAB. As per the announcement SAAB would be alloted stake in Pipavav Defence through preferential allotment for about Rs 201 crore.
The companies had approached the fair trade regulator for its approval on November 30, 2012.