HPCL To acquire MRPL In Share-swap Deal

New Delhi: Hindustan Petroleum Corp Ltd (HPCL) is likely to acquire Mangalore Refinery and Petrochemicals (MRPL) in a share-swap deal to develop into India’s second-largest oil refiner.

The merger is more likely to happen after ONGC, nation’s greatest oil and gasoline explorer, completes acquisition of HPCL in an all-cash deal by December or January, officials in know of the event stated. MRPL is a subsidiary of Oil and Natural Fuel Corp (ONGC).

At current, ONGC owns 71.63 per cent stake in MRPL while HPCL has 16.96 per cent. Once ONGC acquires 51.11 per cent stake in HPCL, India’s third-largest refiner, for about Rs 35,000 crore, it may have two refinery subsidiaries – HPCL and MRPL.

“It does not make financial sense to have two separate subsidiaries for the same enterprise. And so the logical move can be to combine MRPL with HPCL,” an official mentioned.

The federal government is selling its entire fifty one.11 per cent holding in HPCL to ONGC for all-cash. HPCL will become a subsidiary of ONGC after the deal and retain impartial board.

“HPCL can acquire MRPL both by shopping for out ONGC’s shares, which at at this time’s trading price is price near Rs sixteen,800 crore. The opposite choice is share-swap, wherein ONGC will get extra shares in HPCL in lieu of it giving up its control in MRPL,” the official mentioned.

Share-swap, he stated, is most likely choice for the merger.

“An exercise to arrive at valuations and so forth will start shortly,” he mentioned.

One other official mentioned it makes business sense for ONGC to bring all its refinery business beneath one umbrella. He mentioned the board of ONGC and HPCL are yet to think about Tower the proposal. HPCL will add 23.8 million tonnes of annual oil refining capability to ONGC’s portfolio.

This along with 15 million tonnes refinery of MRPL will create India’s second-biggest state-owned oil refiner after Indian Oil Corp (IOC). MRPL would be the third refinery of HPCL, which already has items at Mumbai and Visakhapatnam.

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