Imperial supports OVL’s $2.58 bn buyout offer
After many defeats, success over a Chinese rival is at hand for ONGC Videsh Ltd (OVL).
Acquisition will depend on Russian authorities
MUMBAI: After many defeats, success over a Chinese rival is at hand for ONGC Videsh Ltd (OVL).
The board of UK-based Imperial Energy on Tuesday said it has reached an agreement with OVL
On Tuesday, OVL agreed to buy Imperial Energy for £1.4 billion ($2.58 billion or Rs 11,000 crore) or 1250 pence per share in a cash offer that was approved by the Russia-focused oil explorer.
That’s a 62% premium over Imperial’s share price on July 11, the day the London-based company said it received a bid.
But China Petroleum and Chemical Corporation said it may make a counter-bid.
Su Shulin, the chairman of China Petroleum, known as Sinopec, said in Hong Kong on Tuesday that the parent company is doing preliminary work on a bid for Imperial Energy.
The Imperial acquisition will double ONGC’s proved and potential reserves.
Under a mutual agreement, ONGC Videsh will also offer to acquire Imperial Energy convertible Bonds through Jarpeno Ltd (Bidco), a Cyprus-based 100% subsidiary of OVL.
Peter Levine, executive chairman of Imperial Energy, who founded the company in said, “Imperial’s directors are pleased to have been able to reach agreement with OVL and intend unanimously to recommend shareholders accept the proposed offer…”
Media reports from London said if ONGC’s bid goes through, Peter Levine stands to make around £90 million or Rs 720 crore.
He floated the company in April 2004 at 25 pence a share and retains a 6.1% stake as well as having share options.
R S Butola, managing director, OVL, said, “We are delighted that Imperial directors have taken the unanimous decision to recommend our offer. The acquisition represents an important addition to OVL’s operations and we believe OVL’s financial strength and technical expertise will further enhance the attractive growth potential of the business in the Tomsk region.”
Talking to DNA Money, Andrew Osborne of Merrill Lynch, which is the lead financial advisor to Imperial, said, “This is a pre-conditional offer and the next development depends on how ONGC satisfies Russian conditions.”
He said it is tough to say as to how much time it will take for the deal to be signed on paper as it is completely politically driven from here.
“But we have learnt that ONGC is negotiating with its Russian counterparts and they will try to work it out as soon as possible,” he said.
An ONGC spokesperson said, “Our foray in Russia is only limited to Sakhalin. This buy will have a major impact and we will be have an a major access to the country.”
An analyst with a domestic leading brokerage said the trouble with Russia earlier was that it was not open to foreign investments in its oil and gas blocks.
Therefore, the buy will be beneficial for ONGC. But they will have to tie-up with a local partner as Imperial Energy’s blocks are surrounded by Rosneft and Gazprom.
Imperial has 174.6 million barrels of oil equivalent of proven oil and gas reserves, spread across 17 fields. It has a presence in the Tomsk region of western Siberia and Kazakhstan. With agencies.