ONGC set to complete Imperial Energy deal

90% stakeholders tender shares in open offer.

The acquisition of UK-based Imperial Energy by the state-owned Oil and Natural gas Corporation (ONGC) is set to complete as more than 90 per cent of its shareholders have tendered their shares in the open offer, which closed on December 30. Imperial Energy would be delisted to become a wholly-owned subsidiary.

After getting all the regulating approval from Russian authorities, ONGC Videsh, the overseas investment arm of ONGC, had made a 21-day open offer on December 9, which was subject to the condition that the company will accept the offer only if it received support of 90 per cent of the shareholders.

Sources in the investment banking said that the nearly 92 per cent of the shareholders of Imperial Energy have tendered their shares in the open offer. At the current exchange ratio, ONGC will have to fork out 1.28 billion pound, equivalent to $1.85 billion. In addition, the company will pay $190 million against the convertible instruments, taking the total consideration to little over $2 billion.

Under the UK norms, once the company crossed the 90 per cent limit, it needs to extend the open offer for another 14 days for the residual shareholders to tender their shares, said an investment banker.

After acquiring more than 90 per cent share of Imperial Energy, OVL would de-list the company from the London Stock Exchange. “Since the Indian company owns more than 90 per cent of the shareholding of Imperial Energy, it is entitled to delist the company under the listing agreement. The company is intending to do so,” sources said.

Under the UK takeover code, OVL needs to pay to all the shareholders of Imperial Energy within 14 days of the December 30, who have tendered their shares. For the rest of shareholders, they will be paid after 14 days of the closure of the open offer, sources said.

Due to sharp fall in the crude oil prices, ONGC wanted to wriggle out of the deal but it was late as it had received approval from the Russian regulators. Under the UK takeover panel, once all the approval was given it was virtually difficult for the acquirer to walk out of the deal.

Since the OVL bid was subject to condition that company would accept the offer only ‘in case it receives 90 per cent of the outstanding shares,’ it has to offer as this condition as it has received more than 90 per cent of the of the shares.

OVL is likely to borrow around $1 billion from its parent company ONGC at a less-than-market interest rate of 6 per cent, ONGC officials had said earlier. The remaining $900 million is likely to be raised from domestic banks.

OVL had made an offer to buy the shares at 1,250 pence in August this year when oil prices were at around $128 per barrel. Imperial’s share prices on the London Stock Exchange rose 9.22 per cent to 1,125 pence per share at 1 pm London time, when the open offer closed.

ONGC’s share price on the Bombay Stock Exchange rose 2 per cent on Tuesday. ONGC and OVL officials did not comment on the Imperial deal.

Imperial Energy has its oil and gas assets in eastern Russia and north Kazakhstan.