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Our Bureau

New Delhi, Aug. 26 ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, on Tuesday shed the tag of being a non-aggressive player in the international M&A scene, with the announcement that it has agreed to acquire LSE-listed Imperial Energy Corporation plc for approximately £1.4 billion (about Rs 11,400 crore).

The OVL offer now needs approval of the Russian Government and the individual shareholders of Imperial Energy. The firm is an independent upstream oil exploration and production entity with its main activities in CIS countries.

OVL said that it has reached an agreement with Imperial Energy “on the terms of recommended pre-conditional cash offers for the entire issued and to-be-issued ordinary share capital of Imperial Energy, and for Imperial Energy’s outstanding convertible bonds.”

“Under the terms of the share offer, Imperial Energy shareholders will be entitled to receive 1,250 pence in cash for each Imperial Energy share held,” OVL said.

For the purpose, OVL has incorporated a wholly-owned subsidiary Jarpeno Ltd (Bidco) in Cyprus. The posting of the offer document to Imperial Energy shareholders is pre-conditional on certain regulatory clearances being obtained.

The deal attracted attention as OVL was facing competition from China Petroleum and Chemical Corp (Sinopec). The companies from the two Asian countries have faced each other before, with China mostly emerging a winner. However, earlier, the companies of the two countries have jointly acquired Omimex de Colombia Ltd from Texas-based Omimex Resources, Inc.

Speaking to Business Line, Mr R.S. Butola, Managing Director, OVL, said, “The acquisition represents an important addition to OVL’s operations. The final bid of 1,250 pence a share was made after completing the entire due diligence of the project.”

The initial offer made by OVL was for 1,290 pence for each share. As regards how the acquisition will be funded, Mr Butola said, “We have all necessary authorisation from the Government and ONGC. Besides, the company has also tied up its funds.”

Asked whether there will be an open offer, he explained it is a kind of open offer, after the Russian Government’s approval, the company would be making an offer to the individual shareholders. On whether a Russian energy company may get involved in the transaction, sources closely associated with the negotiations said the possibility can be looked at. Imperial Energy directors intend unanimously to recommend that Imperial Energy shareholders and bondholders accept the respective offers, OVL said. The Imperial Energy Directors consider the terms of the offer to be “fair and reasonable,” a statement issued by Imperial Energy said.

Imperial produced about 10,000 barrels of oil a day in December 2007 and is targeting to raise this to 80,000 barrels a day by the end of 2011. Independent assessment of the reserves by DeGolyer and McNaughton in December 2007 suggested in-place reserves of 920 million barrels of oil equivalent. However, on how the acquisition would translate in per-barrel realisation for OVL, sources said it was too early to comment.

More Stories on : Petroleum | Mergers & Acquisitions | Overseas Investments | Oil & Natural Gas Corporation Ltd

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