State-owned Oil and Natural Gas Corp (ONGC) is keen to acquire India’s third-biggest fuel retailer Hindustan Petroleum Corp Ltd (HPCL) in a Rs42,254 crore deal after finding Bharat Petroleum Corp Ltd (BPCL) too expensive to buy.
Following up on finance minister Arun Jaitley’s budget announcement of creating an integrated oil company, ONGC evaluated options of acquiring either HPCL or BPCL—the two downstream oil refining and fuel marketing companies. While acquiring either one of them made a lot of business sense, ONGC found the nation’s second-biggest fuel retailer, BPCL too expensive, people privy to the development said.
BPCL has a market cap of Rs1,01,738 crore and buying government’s 54.93% would along have entailed an outgo of Rs55,885 crore. So, ONGC is in favour of acquiring HPCL, which has a market cap of Rs54,797 crore and buying government’s entire 51.11% stake would entail an outgo of Rs28,006 crore. Another Rs14,000 crore or so would be required in case open offer has to be made.
Credit- Live Mint