By BS Reporter
Barely a week after the British Gas's (BG's) stake in Gujarat Gas Company Limited (GGCL) was put on the block, the Gujarat State Petroleum Corporation Ltd (GSPC) has signed a definitive agreement to pick up the entire 65.12 per cent stake for Rs 2,463.8 crore at Rs 295 a share.
Initially, a consortium of PSUs, including GSPC, Oil and Natural Gas Corp Ltd (ONGC) and Bharat Petroleum Corporation Ltd (BPCL), had bid for the controlling stake in the BG group's city gas distribution company. However, according to a person close to the development, GSPC later decided to go solo through its fully owned company, Gujarat Distribution Networks Ltd (GDNL).
BG's sale of Gujarat Gas marks the beginning of its exit from the city gas distribution business. The company has a strategic holding in Mahanagar Gas Ltd, the city gas distributor in Mumbai.
The deal is scheduled to be completed during the first half of 2013, BG said in a statement. "With this announcement, 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," said BG Group CEO Sir Frank Chapman.
GGCL's stake sale comes at a discount to BG, whose asking price for its stake was Rs 3,500 crore. GGCL's current market capitalisation stands at Rs 4,318 crore. GGCL shares closed at Rs 336.70 on the Bombay Stock Exchange on Wednesday.
The deal is subject to regulatory approvals. It needs to meet the takeover code of stock markets regulator Sebi and get approvals from the Competition Commission of India and the Reserve Bank of India.
"We are pleased to announce this acquisition that enhances GSPC group's presence in the state of Gujarat. The acquisition is in the long term interests of the industrial and retail customers of Gujarat," Tapan Ray, managing director of the GSPC Group said in a statement.
The acquisition bears a significant strategic importance and will add significant customer base to GSPC's existing business in Gujarat, the statement said. Besides, the acquisition is consistent with the stated strategic objective of expanding the company's presence in upstream and downstream segments of the energy value chain and realising the vision of developing Gujarat as natural gas driven economy, the statement added.
GSPC Group is one of the leading oil and gas exploration, development and production companies in India. It is also one of the largest gas trading companies of the country. The Group has a significant presence in the gas transmission and gas distribution businesses. The government of Gujarat is a majority shareholder in the Group.