April 24 (Bloomberg) -- Singapore Airlines Ltd., Southeast Asia’s biggest carrier, will raise its stake in Virgin Australia Holdings Ltd., deepening an alliance to take on the dominance of Qantas Airways Ltd. in the local market.
Singapore Air will buy 255.5 million Virgin Australia shares owned by Virgin Group for A$122.6 million ($126 million), or 48 Australian cents apiece, the carrier said in an e-mailed statement today. The purchase -- at a 5.5 percent premium to yesterday’s closing price -- will lift Singapore Air’s stake in Virgin to 19.9 percent from 10 percent.
Singapore Air and Virgin Australia are widening their alliance to challenge the Qantas, which controls about 65 percent of the domestic travel market. Virgin Australia yesterday got approval to buy 60 percent of the local unit of Tiger Airways Holdings Ltd.
Virgin Australia Chief Executive Officer John Borghetti is targeting corporate customers with business class seats and upgraded lounges as part of his strategy to take on Qantas.
Virgin Australia advanced as much as 2.2 percent to 46.5 cents, and traded at 46 cents as of 11:29 a.m. in Sydney. Singapore Air fell 0.4 percent to S$10.61 in the city.
The acquisition will depend on approval from Australia’s Foreign Investment Review Board.
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