ONGC, Oil India likely to buy IOC stake at `220 per share
The transaction may take place on 14 or 15 March, the sources said
New Delhi: State-owned Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL) are likely to buy a 10% stake in Indian Oil Corp. Ltd (IOC) from the government at ₹ 220 per share, aggregating about ₹ 5,300 crore.
An empowered group of ministers (EGoM) headed by finance minister P. Chidambaram had on 28 February decided to sell the stake in IOC, the nation’s largest oil firm, at a discount of 10% through an off-market deal.
Sources said the IOC scrip traded at about ₹ 245 on that day and a 10% discount to that price was calculated to arrive at a selling price of ₹ 220 a share. Also, 220 is the three-month average trading price of IOC shares. The sale of 10% stake, or 242.7 million shares, will be through an off-market transaction, with ONGC and OIL each buying 5%.
The transaction may take place on 14 or 15 March, the sources said.
Oil Minister M. Veerappa Moily had on 28 February confirmed the sale will happen at 10% discount. “The two companies (ONGC and OIL) will now work out the deal and the stake sale will happen very shortly. It should be happening in next few days...It will be an off-market deal," then oil secretary Vivek Rae stated after the EGoM meeting.
IOC shares fell 0.41% to ₹ 254.10 on BSE in afternoon trade on Thursday. They have gained more than ₹ 42 since 16 January, when the EGoM on disinvestment cleared the stake sale at the current market price, plus/minus 1%.
ONGC and OIL, however, wrote to the petroleum ministry saying they would each buy a 5% stake in IOC at the six-month average traded price and not at the current rate. The government then decided to offer the IOC shares to the companies at a 10% discount to the current market price through an off-market deal.
ONGC currently holds an 8.77% stake in IOC. Although the cabinet had originally cleared the stake sale in IOC through an offer for sale, the finance ministry had to go in for the block deal route after opposition from the petroleum ministry. The ministry had argued that IOC shares should not be sold through an offer for sale as the current price did not reflect the right valuation of the company.
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