ONGC to acquire government's 51.1% stake in HPCL for Rs 36,915 crore
, ET Bureau|
Updated: Jan 20, 2018, 06.33 PM IST
NEW DELHI: Oil and Natural Gas Corp (ONGC) has agreed to acquire the government's entire 51.11% stake in Hindustan Petroleum for about Rs 37,000 crore in an all-cash deal that would close by month-end.
The share sale will help government exceed its divestment target of Rs 72,500 crore in 2017-18 - a first for the government ever. The government has already raised Rs 54,337 crore so far this year.
India's largest oil producer will buy HPCL shares at Rs 473.97 apiece, a 14% premium to the Friday close of Rs 416.55, according to the exchange filing by ONGC. HPCL shares have risen 26% in a year.
ONGC has been exempt from making an open offer to HPCL's minority shareholders, the company said in the filing, adding that no other regulatory approval is required for the transaction.
The combined market value of ONGC and HPCL is Rs 311,925 crore, or $49 billion, comparable with Russian energy giant Rosneft's $61 billion.
"Through this acquisition, ONGC will become India's first vertically integrated 'oil major' company, having presence across the entire value chain," the Finance Ministry said in a statement.
"ONGC expects that as an integrated oil conglomerate, its performance will be less affected by the volatility of crude prices due to diversification of its cash flows to midstream and downstream presence through HPCL," ONGC said.
By turning HPCL into its subsidiary, ONGC, which produces 60% of country's crude oil, will also become the nation's third-largest refiner with control over 40 million tonnes per annum of refining capacity.
ONGC already controls a 15 million tonnes refinery through its unit, MRPL. The deal would also give ONGC control over HPCL's 14,700 filling stations, or about a quarter of country's petrol pumps.
The share sale will help government exceed its divestment target of Rs 72,500 crore in 2017-18 - a first for the government ever. The government has already raised Rs 54,337 crore so far this year.
India's largest oil producer will buy HPCL shares at Rs 473.97 apiece, a 14% premium to the Friday close of Rs 416.55, according to the exchange filing by ONGC. HPCL shares have risen 26% in a year.
ONGC has been exempt from making an open offer to HPCL's minority shareholders, the company said in the filing, adding that no other regulatory approval is required for the transaction.
The combined market value of ONGC and HPCL is Rs 311,925 crore, or $49 billion, comparable with Russian energy giant Rosneft's $61 billion.
"Through this acquisition, ONGC will become India's first vertically integrated 'oil major' company, having presence across the entire value chain," the Finance Ministry said in a statement.
"ONGC expects that as an integrated oil conglomerate, its performance will be less affected by the volatility of crude prices due to diversification of its cash flows to midstream and downstream presence through HPCL," ONGC said.
By turning HPCL into its subsidiary, ONGC, which produces 60% of country's crude oil, will also become the nation's third-largest refiner with control over 40 million tonnes per annum of refining capacity.
ONGC already controls a 15 million tonnes refinery through its unit, MRPL. The deal would also give ONGC control over HPCL's 14,700 filling stations, or about a quarter of country's petrol pumps.
