Merger may be preferred route for ONGC, HPCL

Merger may be preferred route for ONGC, HPCL

The consolidation among public sector oil companies could start with a merger, rather than a takeover. Senior government officials say a merger or an amalgamation could obviate the need for an open offer to buy equity from minority shareholders. The first to get off the ground would be Oil and Natural Gas Corporation (ONGC) and Hindustan Petroleum Corporation Ltd (HPCL). If the idea of a merger or an amalgamation is accepted, such a route would not burden ONGC. A takeover would have resulted in HPCL becoming a subsidiary of ONGC.

In case of an amalgamation, the two entities do not exist and a new entity is created, while in a merger, one company merges into another. Both the options do not require open offer and the regulatory procedure is same for them.

Though an official said GAIL, too, was keen to take over or look at merger with Oil India or one of the oil marketing companies, it is the ONGC-HPCL consolidation that would kick off first. Read more

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