NEW DELHI: State-owned Oil and Natural Gas Corp (ONGC) lately announced acquisition of government's complete 51.11 consistent with cent stake in oil refiner HPCL for Rs 36,915 crore, paying a top class of over 10 consistent with cent.
ONGC will pay Rs 473.97 consistent with share for 77.8 crore stocks of the government in Hindustan Petroleum Corp Ltd (HPCL), the corporate mentioned in a stock change submitting.
The value it's paying is 14 consistent with cent higher than Friday's remaining value of HPCL and over 10 consistent with cent of the 60 -day weighted moderate of the scrip.
The transaction, which will help the government cross its annual sell-off (disinvestment) goal for the primary time ever, has been carried out via an off-market deal.
While the government began off talks for promoting controlling stake within the nation's third greatest oil refining and fuel advertising and marketing company, seeking about Rs 1 lakh crore on grounds that an open sale would fetch at least that, what ONGC paid used to be a long way much less.
ONGC's own valuation adviser EY had put HPCL's valuation at Rs 475 a share plus a top class for buying the controlling stake, sources privy to the negotiations mentioned. The outdoor advise the corporate took from Citi put the price at Rs 500 consistent with share.
ONGC negotiated hard and taken down the purchase value, they mentioned adding the corporate would do short-term borrowing to fund the purchase that will be an all cash-deal to be finished via finish of the month.
Also, the corporate has coins reserves of about Rs 12,000 crore.
Sources mentioned ONGC has already taken board acclaim for raising borrowing restrict to Rs 35,000 crore from the previous approval of Rs 25,000 crore. Also, it has mortgage commitments from domestic and international lenders totalling kind of double the purchase prices and the corporate would draw from them to make the bills in next one week, they mentioned.
Based on Friday's remaining value of Rs 416.55, HPCL has a market capitalisation of about Rs 63,475 crore. At this value, the government's 51.11 consistent with cent stake is worth Rs 32,442 crore.
"Government of India has entered into an agreement with ONGC today for strategic sale of its 51.11 per cent equity share-holding in HPCL at a consideration of Rs 36,915 crore," the finance ministry tweeted.
The ministry reasoned the merger to the February 2016 evaluate referred to as via Prime Minister Narendra Modi where he "underlined the need of efficient management of government investments in central public sector enterprises (CPSEs)".
The government accordingly expanded the means from of disinvestment to funding and public asset management.
"Accordingly, as part of investment management strategy, the Government of India decided to explore possibilities of consolidation, mergers and acquisitions within CPSE space. An announcement in this regard was also made by the finance minister in his Budget speech of 2017-18," it mentioned.
In line with the finance minister's Budget announcement, ONGC proposed to procure the government's current 51.11 consistent with cent equity shareholding in HPCL.
The Union Cabinet, in its meeting held on July 19 last year, gave 'in-principle' approval to the mentioned proposal and decided to arrange an alternative mechanism underneath the finance minister to decide on the value, timing and the terms and prerequisites of the strategic sale.
"The alternative mechanism under the chairmanship of finance minister in its meeting today approved the price bid of ONGC and the terms and conditions of the sale," it mentioned.
Through this acquisition, ONGC will become India's first vertically built-in 'oil main' company, having presence across all the price chain. The built-in entity can have advantage of having enhanced capacity to bear higher dangers and take higher funding decisions and so on.
In this process, ONGC has got important mid-stream and downstream capacity and will reach economies of scale at quite a lot of levels of operations.
With a turnover of Rs 2,13,489 crore and profit of Rs 6,502 crore right through 2016-17, HPCL ranks at 384th place in Fortune Global 500 and 48th position in Platts 250 Global Energy Companies.
HPCL markets around 35.2 million tonnes of petroleum merchandise with a market share of about 21 consistent with cent and is number one lube marketer within the nation. It has refineries at Mumbai and Visakhapatnam and a joint venture refinery at Bhatinda.
It owns the largest Lube refinery in India and the second greatest cross nation product pipeline network of about 3,500 km. HPCL has a vast advertising and marketing network spread around the length and breadth of the country with terminals, depots, LPG bottling vegetation, Lube blending vegetation, aviation fuel stations and around 15,000 petrol pumps.
"ONGC Board on January 19, 2018 considered the proposal and approved acquisition of the entire 51.11 per cent shareholding (778,845,375 equity shares) of the President of India, at a cash purchase consideration of Rs 473.97 per share with a total acquisition cost of Rs 36,915 crore," the corporate mentioned.
ONGC is the most important producer of crude oil and natural gas in India, contributing around 70 consistent with cent of domestic manufacturing.
ONGC will pay Rs 473.97 consistent with share for 77.8 crore stocks of the government in Hindustan Petroleum Corp Ltd (HPCL), the corporate mentioned in a stock change submitting.
The value it's paying is 14 consistent with cent higher than Friday's remaining value of HPCL and over 10 consistent with cent of the 60 -day weighted moderate of the scrip.
The transaction, which will help the government cross its annual sell-off (disinvestment) goal for the primary time ever, has been carried out via an off-market deal.
While the government began off talks for promoting controlling stake within the nation's third greatest oil refining and fuel advertising and marketing company, seeking about Rs 1 lakh crore on grounds that an open sale would fetch at least that, what ONGC paid used to be a long way much less.
ONGC's own valuation adviser EY had put HPCL's valuation at Rs 475 a share plus a top class for buying the controlling stake, sources privy to the negotiations mentioned. The outdoor advise the corporate took from Citi put the price at Rs 500 consistent with share.
ONGC negotiated hard and taken down the purchase value, they mentioned adding the corporate would do short-term borrowing to fund the purchase that will be an all cash-deal to be finished via finish of the month.
Also, the corporate has coins reserves of about Rs 12,000 crore.
Sources mentioned ONGC has already taken board acclaim for raising borrowing restrict to Rs 35,000 crore from the previous approval of Rs 25,000 crore. Also, it has mortgage commitments from domestic and international lenders totalling kind of double the purchase prices and the corporate would draw from them to make the bills in next one week, they mentioned.
Based on Friday's remaining value of Rs 416.55, HPCL has a market capitalisation of about Rs 63,475 crore. At this value, the government's 51.11 consistent with cent stake is worth Rs 32,442 crore.
"Government of India has entered into an agreement with ONGC today for strategic sale of its 51.11 per cent equity share-holding in HPCL at a consideration of Rs 36,915 crore," the finance ministry tweeted.
The ministry reasoned the merger to the February 2016 evaluate referred to as via Prime Minister Narendra Modi where he "underlined the need of efficient management of government investments in central public sector enterprises (CPSEs)".
The government accordingly expanded the means from of disinvestment to funding and public asset management.
"Accordingly, as part of investment management strategy, the Government of India decided to explore possibilities of consolidation, mergers and acquisitions within CPSE space. An announcement in this regard was also made by the finance minister in his Budget speech of 2017-18," it mentioned.
In line with the finance minister's Budget announcement, ONGC proposed to procure the government's current 51.11 consistent with cent equity shareholding in HPCL.
The Union Cabinet, in its meeting held on July 19 last year, gave 'in-principle' approval to the mentioned proposal and decided to arrange an alternative mechanism underneath the finance minister to decide on the value, timing and the terms and prerequisites of the strategic sale.
"The alternative mechanism under the chairmanship of finance minister in its meeting today approved the price bid of ONGC and the terms and conditions of the sale," it mentioned.
Through this acquisition, ONGC will become India's first vertically built-in 'oil main' company, having presence across all the price chain. The built-in entity can have advantage of having enhanced capacity to bear higher dangers and take higher funding decisions and so on.
In this process, ONGC has got important mid-stream and downstream capacity and will reach economies of scale at quite a lot of levels of operations.
With a turnover of Rs 2,13,489 crore and profit of Rs 6,502 crore right through 2016-17, HPCL ranks at 384th place in Fortune Global 500 and 48th position in Platts 250 Global Energy Companies.
HPCL markets around 35.2 million tonnes of petroleum merchandise with a market share of about 21 consistent with cent and is number one lube marketer within the nation. It has refineries at Mumbai and Visakhapatnam and a joint venture refinery at Bhatinda.
It owns the largest Lube refinery in India and the second greatest cross nation product pipeline network of about 3,500 km. HPCL has a vast advertising and marketing network spread around the length and breadth of the country with terminals, depots, LPG bottling vegetation, Lube blending vegetation, aviation fuel stations and around 15,000 petrol pumps.
"ONGC Board on January 19, 2018 considered the proposal and approved acquisition of the entire 51.11 per cent shareholding (778,845,375 equity shares) of the President of India, at a cash purchase consideration of Rs 473.97 per share with a total acquisition cost of Rs 36,915 crore," the corporate mentioned.
ONGC is the most important producer of crude oil and natural gas in India, contributing around 70 consistent with cent of domestic manufacturing.
ONGC buys government's 51.11% stake in HPCL for Rs 36,915 crore
![ONGC buys government's 51.11% stake in HPCL for Rs 36,915 crore]()
Reviewed by Kailash
on
January 20, 2018
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