National News
22 JAN 2018

HPCL acquisition to improve ONGC's appetite for overseas acquisition: CMD Shashi Shanker New Delhi: Oil and Natural Gas Corporation (ONGC), India's first to be fully integrated 'Oil Major', will will benefit from an increased appetite for overseas acquisitions post the Rs 36,915 crore acquisition of state-run fuel retailer Hindustan Petroleum (HPCL), Chairman and Managing Director Shashi Shanker said.

"With the consolidated balance sheet of ONGC and HPCL, we will probably be better equipped to leverage it for overseas acquisitions even for difficult assets," Shanker said at a media interaction here on the company's latest approval to the HPCL deal.

He added minority shareholders should continue to be invested in the company as benefits arising from the vertical integration will benefit them in the long term.

"The acquisition is good for minority shareholders. The acquisition of HPCL has been done after a lot of due diligence and study. Our group company also has MRPL. The synergies with HPCL which will materialize in refining, marketing and sourcing of crude, coupled with the ability to cushion crude price shocks will have a positive impact on shares and minority shareholders should benefit from this acquisition," Shanker said on the sidelines of the interaction.

ONGC has been exempted from making an open offer to HPCL's minority shareholders, the company said in an official release on Saturday.

Responding to a question on the reason for acquiring HPCL at a 14 per cent premium on HPCL's Friday close of Rs 416.55, Shanker said: "The price is well within the numbers advised by the independent consultant as well as the transaction adviser."

The ONGC Chairman also assured that there will be no tampering with HPCL's management or corporate identity post the merger. He also said that MRPL's merger with HPCL is a possibility but a decision will be taken after the completion of proper due diligence and requisite approvals.

Shankar said that the company has not taken a decision on how to fund the acquisition even as it has multiple options available. This includes tapping into cash reserves of around Rs 12,000 crore, liquid assets including shares in Indian Oil Corp (IOC) and GAIL or short-term borrowings.

The ONGC board had recently approved plans to borrow Rs 35,000 crore for assets acquisition and other activities.