BG Group is selling its majority stake in public listed Gujarat Gas Company Limited (GGCL) for approximately Rs 2,460 crore or $470 million to GSPC Distribution Networks Limited, a subsidiary of Gujarat State Petroleum Corporation. Gujarat State Petroleum Corporation is a oil & gas firm owned by the state government of Gujarat.
The agreement, which is subject to regulatory approval, involves the sale of BG Asia Pacific Holdings Pte Limited’s 65.12 per cent controlling interest in GGCL, India’s largest private sector natural gas distribution company.
The deal translates into Rs 294.5 a share or 12.5 per cent discount to the last traded price of Gujarat Gas.
Gujarat Gas scrip declined 2.15 per cent to close at Rs 336.7 a share on the BSE on Wednesday, when the 30-stock benchmark index Sensex rose 0.24 per cent.
Last November, when BG Group first disclosed that it is looking to exit the venture, Gujarat Gas scrip was much higher and its stake was valued around Rs 3,500 crore. The deal has been struck at around two thirds of the value back then.
The business attracted some half a dozen suitors including Adani, with buzz of valuation around $900 million. The final deal has been sealed at just around half that value.
The transaction is scheduled to be completed during the first half of 2013.
BG Group chief executive Frank Chapman said: “We have non-core asset sales agreements in place that will release some $4 billion from our balance sheet. We have made outstanding progress since announcing our two-year $5 billion release programme only eight months ago, and we remain focused on the successful delivery of our growth projects.”
For a comprehensive report on BG Group’s strategy and on its renewed focus on upstream (E&P) and midstream businesses, click here BG Group May Divest Stake In Gujarat Gas.
The deal has also triggered a mandatory open offer. Gujarat State Petroleum Corporation has made an open offer to buy another 26 per cent stake in Gujarat Gas at Rs 314.17 a share, valuing the deal at Rs 1,047.6 crore ($200 million).
The open offer price is at a 6.8 per cent premium to the price at which BG Gas is exiting the venture, but at a similar discount to the market price before the deal was made public.
Gujarat gas scrip tanked over 10 per cent in early trade but recovered partially to trade at Rs 305.5 a share in afternoon trades on the BSE in a strong Mumbai market on Thursday.
JM Financial is managing the open offer on behalf of the acquirer.
The open offer, if fully successful, could lead to delisting of Gujarat Gas, as Gujarat State Petroleum would end up owning 91 per cent stake in the firm, higher than the trigger point of 90 per cent for a public listed firm. Alternatively, it would need to dilute its holding depending on how many shares are tendered. As per listing norms, public listed companies need to maintain at least 25 per cent public holding. The requirement is to be met by mid 2013.
(Edited by Prem Udayabhanu)