Financial Daily from THE HINDU group of publications
Friday, Oct 21, 2005
Financial Daily from THE HINDU group of publications Friday, Oct 21, 2005 |
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Mergers & Acquisitions Industry & Economy - Petroleum Government - Policy Cabinet gives in-principle nod for IBP-IOC merger Our Bureau
New Delhi , Oct. 20 THE merger process of IBP Co Ltd with its parent company Indian Oil Corporation (IOC) on Thursday moved a step further with the Union Cabinet giving an in-principle nod for the merger. However, official sources indicated that there were some differences regarding the proposed swap ratio and the Petroleum Ministry could be asked to re-examine the matter. The current swap ratio proposed by the boards of both the companies was 125 shares of IOC for every 100 IBP shares. Earlier, the merger proposal was held up because the Finance Ministry had raised questions on the swap ratio on the grounds that IBP had been over-valued. The Finance Ministry felt that the merger would result in the reduction of the Government stake in IOC. This made the Petroleum Ministry ask IOC to get a second opinion. Currently, the Government's stake in IOC is 82.03 per cent with the remaining being held by public, financial institutions and foreign institutional investors. At the end of March 2005, IOC held a 53.58-per cent stake in IBP with foreign institutional investors, banks, mutual funds and the public holding the rest. In the merger proposal, the Petroleum Ministry had suggested the creation of a trust to merge IBP into IOC. The proposed trust is expected to be similar to the Petroleum Trust created by Reliance Industries while merging Reliance Petroleum with itself. This merger route will help IOC avert the losses on its books. The merger plan has been designed to enable IOC to avoid booking losses on its investment in IBP. The shares of IOC on Thursday closed at Rs 449.65 and IBP shares closed at Rs 460.05 at the NSE. Other Cabinet decisions The Civil Aviation Ministry's proposal for allowing Air India, Indian Airlines and Airports Authorities of India to establish subsidiaries for undertaking ground handling activities has been deferred, Mr Jaipal Reddy, Minister for Information and Broadcasting, said. The Cabinet gave its approval for an MoU between India and Canada on cooperation in the field of climate change. It also approved a proposal for the signing of an agreement between India and Mauritius on mutual legal assistance in criminal matters.
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