ONGC set to acquire HPCL in Nov-Dec bulk or block deal

While the government is keen that the deal, which would fetch it over Rs 33,000 crore at the current market price, is done in October, ONGC wants time to raise the money required for the acquisition, a senior government official said.

The government's transaction advisor JM Financial and legal consultant Cyril Amarchand Mangaldas is preparing Information Memorandum (IM) on Hindustan Petroleum Corporation Ltd (HPCL) with India's largest oil and gas producer, ONGC, in the next 7-10 days.

ONGC has appointed SBI Caps and the Citi Group as its merchant bankers for the deal and Shardul Amarchand Mangaldas as legal advisor, who would study the IM to arrive at a valuation for the takeover of the country's third-largest refining and oil marketing company.

The official said ONGC will do the due diligence of HPCL's assets based on the IM and publicly available information to arrive at the valuation. Negotiations between ONGC and the government will follow if the valuation is vastly different from the one the government has arrived at.

The share purchase would happen through a bulk or block deal at the prevailing market price, he said, adding that going by the pace of things, the deal could happen some time in November or December.

Both bulk and block deals are done on stock exchanges. A block deal happens when a transaction involves a minimum quantity of 5,00,000 shares or a minimum value of Rs 5 crore between two parties. Such deal takes place through a separate window at the beginning of trading hours for the duration of 35 minutes i.e. from 9.15 am to 9.50 am in a price range of +1% to -1% (plus or minus 1 per cent) of the ruling market price.