ONGC keen to buy HPCL, deal to cost Rs 42,254 cr

HPCL calls for emergency board meeting to clear the revised fiscal package

Latest News –  State-owned Oil and Natural Gas Corp (ONGC) is keen to acquire India’s third-biggest fuel retailer HPCL in a Rs 42,254 crore deal after finding Bharat Petroleum Corp Ltd (BPCL) too expensive to buy.

Following up on Finance Minister Arun Jaitley’s Budget announcement of creating an integrated oil company, ONGC evaluated options of acquiring either Hindustan Petroleum Corp Ltd (HPCL) or BPCL – the two downstream oil refining and fuel marketing companies.

 

While acquiring either one of them made a lot of business sense, ONGC found the nation’s second-biggest fuel retailer, BPCL too expensive, sources privy to the development said.

BPCL has a market cap of Rs 1,01,738 crore and buying government’s 54.93 per cent would along have entailed an outgo of Rs 55,885 crore.

So, ONGC is in favour of acquiring HPCL, which has a market cap of Rs 54,797 crore and buying government’s entire 51.11 per cent stake would entail an outgo of Rs 28,006 crore. Another Rs 14,000 crore or so would be required in case open offer has to be made.

Sources said while initially the government was looking at creating an integrated oil company through merge of an oil producer with a refiner, the idea was dropped for the fear of not repeating of the Air India-Indian Airlines merger.

Similar differences in work culture and ethos prevail in upstream and downstream firms and so the exercise under consideration now is to only help government mop up resources and HPCL would become a mere subsidiary of ONGC.

ONGC already has a refining subsidiary in (Read More)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s