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RIL will buy 22.50 crore equity shares or five per cent of RPL's equity from Chevron. This will raise its stake in the company to 75.38 per cent, besides its board is meeting on Monday to consider buying the rest.
It was not immediately clear at what price RIL is acquiring Chevron's five per cent stake. Sources, however, said the deal would be at Rs 60 a share, the same price at which the US firm had bought five per cent stake in RPL in April 2006.
When contacted, a RIL spokesperson confirmed the buyout but did not indicate the buyout price. Chevron had acquired 22.5 crore shares in RPL as part of an Equity Investment Agreement with RIL.
As per this agreement, RPL and Chevron were to enter into crude supply and product off-take agreements. "Chevron, RIL and RPL have jointly decided not to proceed with the conclusion of these agreements. Consequently, RIL shall purchase 22.50 crore shares of RPL from Chevron," a RIL statement said.
The Equity Investment Agreement also provided that, in case these agreements are not executed, Chevron shall sell and RIL shall buy the five per cent shares of RPL.
On execution of these crude supply and product off-take agreements and certain other agreements, Chevron was to purchase additional 24 per cent stake in RPL from RIL.
However, RIL's holding in RPL will increase from 70.38 per cent to 75.38 per cent after the purchase. RPL in December commissioned its only-for-exports 5,80,000 bpd refinery.
"RIL, with its experience in sourcing of crude and placement of refined products in international markets for the existing refinery at Jamnagar, has chalked out strategy for sourcing of crude, product optimization and placement of products for both the refineries of RIL and RPL," the statement added.
Besides, in two separate filings yesterday, RIL and RPL said that a meeting of the board of directors will be held on March 2, to consider and recommend the amalgamation of Reliance Petroleum and Reliance Industries, the country's most valued firm in terms of market capitalisation. The merger will make RIL one of the world's largest refiners.
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Now industry experts will say that this is excellent decision and news paper will come up with editorial and all stupid analysis. But everyone will forget what happen in the past. Let us recall what happen to RPCL (Reliance Petro Chemicals Limited came up with an IPO in 1987 with Reliance Cup) after 15 years it got merged with the parent company. In 2006 Reliance group collected Rs.6000 crores(for Reliance Petroleum) via IPO and within three years why they want to go for merger. Now it looks like these guys collected fund from public and other institution with brand name. I don’t see any difference between Maytas Vs Satyam and Reliance Industry(RI) Vs Reliance Petroleum. Reliance Industry will come up with a mega IPO in a years time to collect fund and this is going to continue. At the end no one is going to say this is similar to Satyam Vs Mayatas because everyone is with them. All the best to Reliance Group Jai Ho and the best M
Ver well agree what you say brother..
As usual, this was the classic case of showcasing Chevron when the market was going good. The promoters might have made all the profit on the 5 % shares when market was at highs, now they are giving them and easy exit at the original price. Shortly RPL will be merged with a bad ratio for the Indian small investors who will be stuck for years in RIL. Both brother will end the drama soon and kiss each other's as..They are no visionaries, just manipulators... India has many such manipulators, hence the countries roads, railways, infrastructure does not improve because of such thugs.