RIL to become world's 13th largest refiner
Board approves RIL-RPL merger; swap-ratio at 1:16
MUMBAI: The Board of Directors of Reliance Industries has approved a scheme of amalgamation of its subsidiary Reliance Petroleum with the parent company under the provisions of Sections 391 to 394 of the Companies Act, 1956. The scheme will be subject to necessary approvals of shareholders and creditors and sanctions of the High Court of Judicature at Bombay and the High Court of Gujarat at Ahmedabad. The Board of Directors amalgamation is effective from April 01, 2008. Upon completion of the amalgamation, shareholders of RPL will receive 1 fully paid equity share of Rs 10 each of the company for every 16 fully paid equity shares
of Rs 10 each of RPL held by them on the record date to be fixed by the transferee company. On Friday, shares of Reliance Industries closed at Rs 1,265.05, down 1.97 per cent on the BSE and RPL settled at Rs 76.20, 1.23 per cent in the red. Key Points
▪ RIL-RPL Merger: Swap ratio at 1:16
▪ Mukesh Ambani: Merger follows enduring philosophy of creating shareholder value.
▪ Equity capacity of RIL to go up to Rs 1643 cr
▪ Merger will result in the world's largest refining capacity at any single location
▪ RIL will become world's 5th largest polypropelyne manufacturer
▪ Promoter holding in RIL will come down to 47% from 49%
▪ RPL shareholders to get 1 RIL share for every 16 held
▪ RIL to extinguish Treasury Stock, merger to be effective from April 1 2008
▪ RIL to issue 6.92 cr shares to RPL shareholders
▪ Merger to give no tax relief for RIL
▪ Merger to be EPS positive.
▪ Valuation advisor to merger were Ernst & Young and Morgan Stanley and tax advisor for merger is PwC
▪ RIL to issue 6.92 cr shares to RPL shareholder
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Reliance Industries will displace US energy major Chevron Corp to become the 13th largest oil refining company in the world after its
board approved plans to absorb its Reliance Petroleum unit. RIL, the nation's largest listed firm, will issue one share for every 16 held in RPL, giving it direct control of the world's largest refinery complex. The company's 33 million tons only-for-export refinery at Jamnagar together with adjacent 29 million tons SEZ refinery of RPL would make it the largest refining company in India. It displaced state-owned Indian Oil Corp (IOC) with 50.7 million tons refining capacity. IOC was ranked 18th on the world list. The 1.24 million barrels per day refining capacity made the port city of Jamnagar in Gujarat the single largest refining hub in the world. In the list of world's largest refining companies, RIL would replace Chevron to become the 13th largest firm. Chevron has refining capacity of just over 61 million tons. The list is lead by Exxon Mobil with a massive 268 million tons of refining capacity followed by Sinopec of China with 210 million tons of refining capacity. PetroChina with 130 million tons a year capacity is at 7th position. Prior to the merger, RIL will also buyout Chevron's five per cent holding in RPL at Rs 60 a share. Chevron had invested in RPL in April 2006 to have a refining base in South Asia. Before the merger, RIL did not find a mention in the list of the world's top 25 companies by refining capacity. IOC was the only Indian firm in the list and after the entry of RIL, the state-run company would drop one position to the 19th. Iranian national oil firm National Iranian Oil Company is a step ahead of RIL on the world list with 83 million tons a year refining capacity. Royal Dutch Shell (199.25 million tons) is ranked third in the world, followed by BP (161.6 million tons) and ConocoPhilips (140 million tons). Saudi Aramco of Saudi Arabia is ranked at 9th position with just over 100 million tons a year of refining capacity. Total of France is at 10th position with 85.3 million tons capacity. RPL commissioned the world-class refinery in the Special Economic Zone (SEZ) in late December and is targeting markets in the US and North America besides western Europe for the Euro-IV and V grade gasoline and diesel it would produce. The merged company would benefit from lower operating costs, Reliance said.
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RIL-RPL merger to create largest refining capacity
RIL-RPL merger to create largest refining capacity: Ambani
Reliance says amalgamation to be tax neutral
Board approves RIL-RPL merger; swap-ratio at 1:16
RIL will issue one share for every 16 held in RPL, giving it direct control of the world's largest refinery complex. Why RIL wants to merge RPL I How investors can benefit
RIL-RPL merger approved; swap-ratio at 16:1
RIL-RPL merged: Swap ratio fixed at 1:16
11:41 - Highlights of RIL-RPL merger
RIL Sees Synergy SP Tulsian View
RIL-RPL swap ratio evokes mixed response from market
Reliance announces share swap ratio of 16:1
Source:ET,MC,Rediff etc
28 February 2009
RIL shareholders may gain more from merger
RIL shareholders may gain more from merger
MUMBAI: Should one take a long-term bet on Reliance Industries shares or punt on Reliance Petroleum shares for arbitrage opportunities that may
be available till the record date is announced? That is the question that Dalal Street players were asking each other after the two companies informed the stock exchanges, post market hours, that they were considering a merger proposal.
While the swap ratio is yet to be announced, it is widely felt that the ratio will be in favour of RIL shareholders. This is based on the simple arithmetic that there are more minority shareholders in RIL than in Reliance Petroleum.
Independent investment advisor SP Tulsian feels the merger is “slightly negative” for RPL while only “mildly positive” for Reliance Industries.
“I think the swap ratio would be around 20:1 or 24:1,” he adds. Mr Tulsian expects RPL shares to drop to around Rs 70 on Monday. On Friday, RPL shares closed 1.2% lower at Rs 76.20. The shares have fallen 5% over the past one month. Some brokers say the timing of the proposal also indicates that RIL shareholders’ interests have been given priority.
“Had the merger been proposed when RPL shares were near their record highs, the merger ratio would have been 10:1 or 12:1,” (RIL share price was around 10 times the RPL share price at that point) said a fund manager who did not wish to be named.
Life Insurance Corporation and Fidelity Shares are the major institutional investors in Reliance Petroleum, holding 2.06% and 1.67%, respectively.
In a similar context, KRIS director Arun Kejriwal says that RIL would “benefit more” from the swap ratio as it is a “longstanding company and has large reserves.”
“One needs to keep in mind that RIL is also the holding company for other Mukesh Ambani entities,” he adds.
Some analysts feel the merger proposal may be the first of a series of restructuring moves likely in the Reliance group.
“Going ahead, we expect the company to be demerged into two separate businesses — one that has exploration and oil & gas business and the other that runs refining business. We are expecting a total restructuring of Reliance’s business,” said Networth Stock Broking’s research head Deepak Sawhney.
However, there are some who feel that it is difficult to conclude whether RIL or RPL shareholders would benefit more from the merger. “In case of the RIL-RPL merger (in 2002), RIL shareholders benefited, while in RIL-IPCL merger, IPCL shareholders got a better deal,” says Antique Stock Broking oil analyst Amit Rustagi. “But, given that RPL’s shares have fallen sharper than RIL in the past 12 months, we feel that RPL shareholders could get a better ratio than the one based on today’s (Friday) closing price (16.7:1),” he adds.
A few analysts had come out with bearish recommendations on the Reliance Petroleum stock recently. “We have a ‘sell’ rating on pure refiner RPL, owing to our negative outlook on refining margins in the medium term and on gasoline spreads in the near term. We believe the rally in the stock on the back of recent strength of gasoline spreads offers an opportunity to take profits,” brokerage house Goldman Sachs said in its report last week.
But the buzz in the market that RIL stands to gain from the tax exemption that RPL enjoys for the next 10 years. “The tax breaks enjoyed by any subsidiary would get transferred to the parent once the books are consolidated,” said another analyst who wished not to be named.
Highlights of RIL-RPL merger
Biz consolidation behind RIL-RLP merger: BMR Advisors
Reliance, RPL set to merge
Analysts see big benefits for RIL
Source:ET,BS etc
MUMBAI: Should one take a long-term bet on Reliance Industries shares or punt on Reliance Petroleum shares for arbitrage opportunities that may
While the swap ratio is yet to be announced, it is widely felt that the ratio will be in favour of RIL shareholders. This is based on the simple arithmetic that there are more minority shareholders in RIL than in Reliance Petroleum.
Independent investment advisor SP Tulsian feels the merger is “slightly negative” for RPL while only “mildly positive” for Reliance Industries.
“I think the swap ratio would be around 20:1 or 24:1,” he adds. Mr Tulsian expects RPL shares to drop to around Rs 70 on Monday. On Friday, RPL shares closed 1.2% lower at Rs 76.20. The shares have fallen 5% over the past one month. Some brokers say the timing of the proposal also indicates that RIL shareholders’ interests have been given priority.
“Had the merger been proposed when RPL shares were near their record highs, the merger ratio would have been 10:1 or 12:1,” (RIL share price was around 10 times the RPL share price at that point) said a fund manager who did not wish to be named.
Life Insurance Corporation and Fidelity Shares are the major institutional investors in Reliance Petroleum, holding 2.06% and 1.67%, respectively.
In a similar context, KRIS director Arun Kejriwal says that RIL would “benefit more” from the swap ratio as it is a “longstanding company and has large reserves.”
“One needs to keep in mind that RIL is also the holding company for other Mukesh Ambani entities,” he adds.
Some analysts feel the merger proposal may be the first of a series of restructuring moves likely in the Reliance group.
“Going ahead, we expect the company to be demerged into two separate businesses — one that has exploration and oil & gas business and the other that runs refining business. We are expecting a total restructuring of Reliance’s business,” said Networth Stock Broking’s research head Deepak Sawhney.
However, there are some who feel that it is difficult to conclude whether RIL or RPL shareholders would benefit more from the merger. “In case of the RIL-RPL merger (in 2002), RIL shareholders benefited, while in RIL-IPCL merger, IPCL shareholders got a better deal,” says Antique Stock Broking oil analyst Amit Rustagi. “But, given that RPL’s shares have fallen sharper than RIL in the past 12 months, we feel that RPL shareholders could get a better ratio than the one based on today’s (Friday) closing price (16.7:1),” he adds.
A few analysts had come out with bearish recommendations on the Reliance Petroleum stock recently. “We have a ‘sell’ rating on pure refiner RPL, owing to our negative outlook on refining margins in the medium term and on gasoline spreads in the near term. We believe the rally in the stock on the back of recent strength of gasoline spreads offers an opportunity to take profits,” brokerage house Goldman Sachs said in its report last week.
But the buzz in the market that RIL stands to gain from the tax exemption that RPL enjoys for the next 10 years. “The tax breaks enjoyed by any subsidiary would get transferred to the parent once the books are consolidated,” said another analyst who wished not to be named.
- RPL tax break may be passed on to RIL
- RIL, RPL Merger: Fate of treasury stock uncertain
- Chevron to sell 5% in RPL to RIL at cost price of $300 mn
RIL to consider merger with RPL on March 2
Tips to trade RIL-RPL on MondayHighlights of RIL-RPL merger
Biz consolidation behind RIL-RLP merger: BMR Advisors
Reliance, RPL set to merge
Analysts see big benefits for RIL
Source:ET,BS etc
27 February 2009
Update: RIL mulls merger with Reliance Petroleum
Update: RIL mulls merger with Reliance Petroleum
s on December 2008, promoters hold 49 per cent stake in RIL and 70.38 per cent stake in RPL. US major Chevron, which holds 5 per cent stake in RPL, has got an option to raise it by 24 per cent by July 2009. But analysts said this was unlikely now, and Chevron will exit the company at Rs 60 a share.
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Source:ET,BS etc
RIL as well as RPL informed the Bombay Stock Exchange today that it would hold separate board meetings on March 2 to consider the merger.
RIL’s existing refinery was earlier in a separate company also named Reliance Petroleum. This company, which started operations in FY01, was merged with RIL with effect from March 2002.
If the latest merger is approved by the boards, the market capitalization of the combined entity will be Rs 2,33,000 crore at today’s closing price on the BSE. RIL’s market cap now is Rs 1,99,093 crore.s on December 2008, promoters hold 49 per cent stake in RIL and 70.38 per cent stake in RPL. US major Chevron, which holds 5 per cent stake in RPL, has got an option to raise it by 24 per cent by July 2009. But analysts said this was unlikely now, and Chevron will exit the company at Rs 60 a share.
Analysts said RPL shareholders would benefit in the long term from the merger with RIL as they could gain from RIL’s other diversified businesses. Reacting to the announcement, the government said it did not see any immediate issues with the merger proposal. "There should be no legal issues," Petroleum Minister Murli Deora said in New Delhi.
"The merger will not affect the export-oriented unit status of Reliance Petroleum," Commerce Secretary G K Pillai added.
RPL has claimed an annual crude processing capacity of 5,80,000 barrels per day, making it the sixth largest refinery in the world.
Sources close to the company said that the deal was mainly to enhance RIL’s position as an integrated energy major. The markets generally ascribed higher valuation to integrated energy companies compared to standalone refineries due to better competitive position and reduced earnings volatility, they added.
The sources said the merger would catapult RIL among the world’s 50 most profitable companies; top 10 non-state owned refining companies; top 15 independent upstream companies and the fifth largest producer of poly-propylene.
With the merger, RIL will have enhanced weightage in domestic indices. RIL will also gain significantly from higher financial strength and flexibility from the merger, which is likely to be earnings accretive for RIL from the first year itself.
Analysts were not surprised with the latest move as all of RIL’s subsidiaries involved in refining or petrochemicals in the past had eventually been merged with RIL.
Back in 2002, when RPL was merged with RIL, the swap ratio was fixed at 1:11 that is for every one share of RIL, 11 RPL shares.
SP Tulsian, independent equity advisor, said RIL shares could even cross Rs 1,300 next week, while RPL's price can correct to about Rs 70, as ultimately everything depends on the conversion ratio, which was likely to be in the range of 1: 18 to 1;24.
If RIL extinguishes its stake of 70 per cent in RPL, the merger ratio could be 18:1; otherwise it would be be 24:1.
Reliance Industries, Reliance Petroleum mull merger
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Farm growth declines by 2.2 pc in Q3
Source:ET,BS etc
23 February 2009
Slumdog Millionaire sweeps the Oscars,A.R.Rahman bags 2 Oscar
'Slumdog Millionaire' sweeps the Oscars
Jai Ho for A R Rahman and Slumdog at the Oscars
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Sukhwinder celebrates Jai ho victory
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http://specials.rediff.com/movies/2009/feb/23oscars-2009-live-report.htm
http://specials.rediff.com/movies/2009/feb/23slid1-red-carpet-oscars.htm
http://www.rediff.com/movies/oscar09.html
http://ibnlive.in.com/oscars/nominee.php
Director Danny Boyle celebrates with actors Azharuddin Ismail (L) and Ayush Mahesh (R) after 'Slumdog Millionaire' won the Oscar for best picture during the 81st Academy Awards in Hollywood, California on February 22, 2009. (REUTERS).... Next >>
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http://specials.rediff.com/movies/2009/feb/23oscars-2009-live-report.htm
http://specials.rediff.com/movies/2009/feb/23slid1-red-carpet-oscars.htm
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Slumdog Millionaire expected to win the honour for best movie.
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