With the budget just a few days away, Oil and Natural Gas Corporation Ltd. (ONGC) said that it would buy out the entire stake of the Central government in Hindustan Petroleum Corporation Ltd. (HPCL).
The Centre holds 51.11% in HPCL. ONGC will buy these shares at ₹473.97 apiece. The acquisition cost will work out to ₹36,915 crore.
‘Cash transaction’
The shares will be acquired against cash, ONGC said in a filing with BSE. The transaction is expected to close by the month-end. The Central government is the common promoter of both ONGC and HPCL. It holds 67.72% stake in ONGC. The deal is a related party transaction between the government and a government-owned company. The Securities and Exchange Board of India has given exemption from the application of Section 23 of Listing Obligations and Disclosure Requirements. Hence, ONGC is exempted from making an open offer under the rule. Under the takeover code of SEBI, an entity acquiring more than 25% in a listed company has to make an offer to buy another 26% from public shareholders. ONGC’s filing with the BSE said the deal did not require any other regulatory approval as it has been exempted from the Competition Act.
ONGC said the acquisition “has been done in furtherance to the government’s objective to combine various central public sector enterprises to give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value chain for the stakeholders and create an oil major.’’
The deal will help the Centre exceed its ₹72,500-crore sell-off target even as the year’s fiscal deficit target was breached in the first eight months of the year. The Centre’s divestment proceeds as on December 4 were ₹52,390 crore. The HPCL transaction will take it to more than ₹89,000 crore.
