ONGC, Oil India to pay Rs220 per share for Indian Oil stake

State-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) will be investing around Rs5,300 crore to acquire the 10-per cent stake that the government is offloading in Indian Oil Corp (IOC) at Rs220 per share.

The price is fixed at a 10-per cent discount to IOC's traded price of about Rs245 on 28 February, the day finance minister P Chidambaram announced the government's decision to sell 10 per cent stake in IOC.

The government is selling 242.7 million shares, amounting to a 10-per cent stake in IOC, through an off-market transaction, with ONGC and OIL each buying 5 per cent. The transaction is expected to take place on 14 or 15 March, sources said.

On 28 February, minister of petroleum and natural gas M Veerappa Moily confirmed the sale would will happen at a 10-per cent discount (See: ONGC, OIL cleared to buy stake in IOC at 10% discount). 

"The two companies (ONGC and OIL) will now work out the deal and the stake sale will happen very shortly. It should be happening in next few days...It will be an off-market deal," oil secretary Vivek Rae had stated after the EGoM meeting.

Both ONGC and OIL, however, had reservations on buying the IOC stake at current prices and had sought fixing offer price at the six-month average traded price.

IOC shares fell 0.41 per cent to Rs254.10 on the BSE in afternoon trade today.

They have gained more than Rs42 since 16 January, when the EGoM on disinvestment cleared the stake sale at the current market price, plus/minus 1 per cent.

However, the Empowered Group of Ministers (EGoM) headed by finance minister P Chidambaram had on 28 February decided to offer the IOC shares to the companies at a 10 per cent discount to the current market price through an off-market deal.

ONGC currently holds an 8.77 per cent stake in IOC and the fresh acquisition will raise ONGC's crossholding in IOC to 14.77 per cent.