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Essar Oil goes private

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Hydrocarbon Engineering,

Oil Bidco Limited (OBL), promoter of Essar Oil Ltd (EOL), has announced the successful completion of EOL’s delisting offer process, which has emerged as the largest privatisation bid in the history of corporate India, valuing EOL at INR 38 000 crore equivalent to US$5.75 billion of market capitalisation.

Of the 14.25 crore shares held by public shareholders, the promoters have acquired 10.1 crore shares through an offer made to shareholders, as against the requirement of 9.26 crore shares for delisting. The shareholders tendered their shares between 15 and 21 December 2015, through the reverse book building window made available to them under the delisting regulations. While the floor price for the delisting was set at INR 146.05 per share, OBL has agreed to pay INR 262.80 per share, which is a premium of 80%. The INR 3745 crore that will be paid to shareholders makes this the largest payout to privatise a publicly listed company in India.

Furthermore, the shareholders who have not tendered their shares in the delisting offer can offer their shares to the promoters at the delisting price for a period of one year from the date of delisting.

Commenting on the transaction, Shashi Ruia, Founder Chairman, Essar said, “We are happy that we have been able to reward our public and institutional shareholders for the faith they reposed in us over the years. I want to take this opportunity to thank investors, stock exchanges and regulators for their support in this journey.’’

The EOL stock has seen sustained and significant growth since its IPO in 1995. While the company’s market capitalisation stood at just INR 2000 crore in 1995, it is today over INR 38 000 crore at the delisting price. This has been made possible through strategic investments in the business since commencement of commercial operations at the Vadinar refinery in May 2008, especially in expanding and upgrading refining capacity, from 9 million t - 20 million t, and complexity from 6.1 - 11.8.

With this transaction, Essar ranks among one of the world’s largest privately held conglomerates with large scale, world class operations across the globe, spanning oil refining and marketing, power, steel, ports, shipping, EPC and BPO. Essar businesses have revenues of over US$35 billion and employ more than 60 000 people.

The group’s flagship EOL operates the 20 million t Vadinar refinery. Essar Power Ltd has a generation capacity of 6700MW. Essar Steel Ltd has current capacity of 14 million t. Essar Ports operates terminal services with aggregate capacity of 120 million t and Essar Projects is a leading EPC contractor.”

Adapted from press release by Francesca Brindle

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