ONGC in the limelight

ONGC is the big newsmaker today. The Cabinet yesterday gave its approval to ONGC to buy Government’s 51.11% stake in HPCL. Post this merger, HPCL will remain a subsidiary of ONGC and this is expected to be completed in one year.

The deal will be exempted from the mandatory open offer when buying more than 25% in a listed company.

As per yesterday’s closing price, ONGC will have to shell out Rs.29,000 crore for HPCL’s stake and this means one-third of Govt’s divestment target of Rs.72,500 crore will be met.

This is good news as it will create an oil behemoth which will manage volatility in crude prices and compete for overseas assets.

In an interview with Bloomberg, ONGC Chairman said that after the completion of the buyout by ONGC, HPCL will be merged with MRPL – ONGC is a majority shareholder in MRPL.

ONGC is up in the green today, going up to 167.85, a rise of 3%. Its 52-week high is at Rs.212 and low at Rs.145.31.