ONGC subsidiary to acquire UK firm for $1.4 bn

August 26th, 2008 - 8:59 pm ICT by IANS  

New Delhi, Aug 26 (IANS) ONGC Videsh Ltd (OVL), the overseas arm of India’s state-owned oil and gas exploration company Oil and Natural Gas Corp, Tuesday signed a pact with UK’s Imperial Energy to acquire the London stock exchange-listed firm.The board of Imperial Energy, a FTSE 250 oil and exploration company, has approved the recommended pre-conditional cash offers for the entire issued and to-be-issued ordinary share capital and outstanding convertible bonds, valued at 1.4 billion pounds ($2.5 billion or Rs.100 billion).

In a joint statement, OVL and Imperial Energy announced that under the terms of acquisition, shareholders of the UK company will receive a price of 1,250 pence in cash for each share, which includes a premium of 62 percent.

Describing the offer as “fair value”, Imperial executive chairman Peter Levine said: “Imperial Energy has grown significantly from a pure exploration company and as Imperial Energy moves into the next phase of its development, with production increasing further over the coming years, it makes strategic sense to be part of a larger group.”

OVL managing director R.S. Butola said the acquisition of the Russia-focussed Imperial represents an important addition to OVL’s operations.

“We believe OVL’s financial strength and technical expertise will further enhance the attractive growth potential of the business in the Tomsk region [in Russia],” he said.

“Additionally, we view this as an important opportunity to expand on the continuing co-operation between Russia and India in the energy sector,” Butola said.

OVL has been for some time trying to get a bigger presence in the Russia oil market.

The cash offer has been made by OVL through Jarpeno Ltd, a wholly-owned subsidiary incorporated in Cyprus and formed for the purpose of making the offer.

OVL had approached Imperial in July with an offer of 1,290 pence a share. Thereafter, the UK company confirmed it had received an approach from another company, believed to be Chinese oil major Sinopec.

Since July, there has been a sharp decrease in the price of oil, which led to a final offer price of 1,250 pence a share.

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