ONGC’s Acquisition Of HPCL

Almost a year after the idea of creating a truly integrated oil behemoth by merging state-run giants was conceived in the Budget, flagship explorer ONGC on Saturday said it would acquire the government’s holding in the country’s third-largest refinermarketer Hindustan Petroleum for nearly Rs.37,000 crore to complete the first consolidation exercise in the public sector energy space.

The “strategic sale” will see ONGC pay Rs.36,915 crore in cash for the government’s over 51% stake in HPCL. This works out to Rs.473.97 a share, which is a premium of 14% over Friday’s closing price of the HPCL scrip. It is also “reasonably higher” than the government’s own valuation.

The transaction, to be completed by the end of this month, will help the Centre cross its disinvestment target by over Rs.20,000 crore and end the year with a record Rs.90,000 crore sell-off proceeds. With 10 weeks to go for the fiscal year to close, the deal will considerably ease the pressure on government finances and help the Centre close the year with a fiscal deficit that is not far from the budgeted level of 3.2% of GDP, sources said.

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