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IPCL open offer to up RIL acquisition cost to Rs 26.38 billion

BS Corporate Bureau

Reliance Industries has emerged as the successful bidder for the government's 26 per cent stake in Indian Petrochemicals Corporation Ltd.

The company had put in a bid of Rs 231 a share, totalling Rs 14.91 billion. The bid price is at a 74 per cent premium to IPCL's last traded share price of Rs 132.

RIL will also be making the mandatory open offer for 20 per cent equity at the same price. Along with the open offer , the total cost of the acquisition for RIL would work out to about Rs 26.38 billion.

The transaction value of Rs 14.91 billion is the highest amount received thus far in the public sector divestment programme initiated by the government.

With the acquisition, Reliance's petrochemical production of 11.5 million tonne will increase by over 1.33 million tonne, whereas Reliance's sales of over Rs 580 billion per annum would increase by about Rs 52 billion.

IPCL is the country's 19th largest company in terms of sales and second largest petrochemchicals company in terms of sales , assets, net worth and profits.

The company has a 14,000 workforce at its three petrochemical complexes situated at Baroda, Nagothane and Dahej.

The company also has a catalyst manufacturing facility at Rabale in New Mumbai.

Reliance and IPCL would have naphtha fed crackers at Hazira and Baroda, while the crackers at Gandhar and Nagothane would be gas fed to provide a unique advantage in terms of feedtsock and product mix flexibility.

Currently, Reliance produces naphtha which is a feedstock for IPCL. Reliance is also engaged in exploration of oil and gas which could lead to greater feedstock integration between Reliance and IPCL.

Reliance's acquisition of IPCL will be in line with international trends of industry consolidation which would enable both companies to enhance scale, size, integration and financial strength, and the flexibility to pursue future growth opportunities, said a statement issued by the company.

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