Gopinath had heard Mallya out before. Mallya wanted to merge the two airlines, something he was convinced would never work. Besides, he had a bird in hand, even if it wasn’t the prettiest one around. Sources close to the deal say that the Anil Ambani-led Reliance ADAG was in the final stages of discussion to take a controlling stake in Air Deccan (in fact, at the Air Deccan board meeting held on 31 May, both deals were on the table). Even if Mallya offered Gopinath a better deal, it would take too long to close. Still, he heard him out.

This time, Mallya came forward with a new proposal. He was no longer looking at merging the two. Instead, he said he would be happy with a 26 per cent stake, three directors on the board, a new CEO and he would act as vice-chairman himself. He would invest not from Kingfisher Airlines but from UB Holdings, the group holding company. Mallya also pointed out to Gopinath that if he went with Ambani, nobody would gain. Ambani would pump in more money, Mallya would continue to pump in money and the industry’s situation would go from bad to worse. Now, he says, the industry should be grateful to him (see interview on page 32).

As he spoke, two things became evident to Gopinath. One, Mallya’s offer was more palatable than Ambani’s. Mallya claimed Gopinath would continue to be involved in the company — though he would not run it the way he has till now. (Gopinath’s associates said he always had a niggling doubt as to whether Ambani would have allowed him to continue, as he had said he would, once he had control of the company.) Mallya was offering at least Rs 100 crore more (the price agreed upon would probably have been Rs 140 per share in the Ambani deal against Mallya’s Rs 155). Also, the captain’s equity and that of the main investors — Mumbai-based ICICI Venture and Capital International, a US venture fund — were getting diluted. Other terms, conditions and warranties of the deal were onerous. “Too sour to swallow” as this was “virtually a buy-out”, says one source associated with the deal.

On the face of it at least, for Gopinath, three things would be achieved. The Air Deccan brand and its low-cost nature would continue, he would remain involved with the company, and the beleaguered airline’s finances would stabilise. Edelweiss Capital, a Mumbai-based investment advisory firm — mandated in December 2006 to raise $100 million (Rs 410 crore) for Air Deccan — sought to bring two seemingly different individuals to the same table, in a deal they say “brings great value to the industry”. A revised proposal was thrashed out by the firm keeping in mind Gopinath’s concerns and Mallya’s ambitions.

Gopinath also liked the fact that Mallya was not one to waste time — he did no due diligence before making an offer; he wanted four directors on the board but settled for three; he said he’d pay Rs 150 per share, but when Gopinath wanted Rs 160, he settled for Rs 155. In a matter of three days, the deal was tied up — a binding terms sheet was worked out and due diligence done. Gopinath asked Mallya to pay Rs 150 crore to ensure that it was a done deal and the money was in an escrow before the board meeting to approve the deal was held on Thursday, 31 May.

Two, once Mallya made up his mind, it wasn’t easy to shake him off. He would call Gopinath at odd hours from Monaco, Monte Carlo, Paris and the south of France. He never met Gopinath in the days leading up to the announcement, meeting finally on 1 June at Mumbai’s Hilton Towers for the conference to brief the media, but he persisted till he got his way.

Sources close to Gopinath say he was led only by the deal and not the individual, and his unease with the Reliance deal was growing as days went by. Gopinath refused to comment on the Ambani deal when asked about it by BW. Mallya was the only person who confirmed on record that the Ambani deal was very much on (see interview).