Oil and Natural Gas Corp (ONGC) has acquired the Indian government’s 51.11% stake in Hindustan Petroleum Corp (HPCL) for Rs. 369 billion (US$5.78 billion), as recently reported by Reuters.
ONGC will pay a premium of about 14% on HPCL’s current market price for the majority stake, the company said in a statement to the stock exchange. It expects to complete the transaction by the end of January.
ONGC claims that the deal is part of the government’s objective to combine various public sector enterprises “to give them the capacity to bear higher risks” and create more value for shareholders.
It will also help ONGC to diversify its cash flow and reduce its vulnerability to changing global crude prices.
The proceeds from the HPCL stake sale will also help the federal government pay for welfare programmes.
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