The price paid by Aban Loyd represents 81 per cent premium to the share price of HDSIL, which closed at Rs 50.70 at the Bombay Stock Exchange (BSE) on March 16.

A joint press release issued by Tatas and Aban stated that the acquisition deal, which has created the largest private offshore drilling service provider in India, requires Aban to make an open offer for the entire balance outstanding shares representing 77.5 per cent stake in HDSIL at the same price.

"Tata Industries constantly evaluates its business strategy and business portfolio. In pursuit of this, we decided that we should divest our ownership in HDSIL at an attractive valuation offered to us", HDSIL chairman and Tata Industries Ltd managing director, KA Chaukar said on the deal.

Commenting on the acquisition, Aban chairman and managing director, MA Abraham stated: "The acquisition adds a 300-feet jack-up drilling rig and one floating production facility to our existing two offshore rigs, which will create scale economies for us with an expected turnover of Rs 200 crore on a consolidated basis."

Rajeev Gupta (head, M&A and executive vice-president) at DSP Merrill Lynch, who advised Aban on the acquisition said: "This transaction puts Aban on an accelerated growth path and creates immediate value for its shareholders."

The entire buy-out subsequent to the open offer works out to Rs 187.3 crore, for which Aban has availed of financial assistance and facilities from ICICI for the acquisition and the ensuing open offer. DSP Merril Lynch would act as manager and I-Sec would be the advisor to the open offer, the release said. This acquisition is a major milestone for Aban group, whose other interests are in on-shore oil drilling and mechanical/civil construction.

Aban group had earlier acquired 300 feet jack up rig from Mahindra and Mahindra, which is now drilling in Bombay High.

Aban Loyd sees enhanced opportunity set for itself in Indian and overseas with the increase in its size and ranking. With oil prices ruling firm and liberalised licensing of exploratory blocks in the country, offshore exploratory activity is slated for significant growth leading to increased demand for offshore drilling rigs, the release said.

Aban vice-president (finance and secretary), CP Gopalkrishnan said that the acquisition would be earnings accelerative from the very first year ie 2001-02.

"While one of the two drilling rigs of Aban is being upgraded, the other rig as well as HDSIL's rig are engaged in long term time charters. We believe that given the strong outlook on the drilling industry, the consolidation would enable Aban to adopt a diversified chartering approach through a combination of long term and spot charters", Mr Gopalkrishnan added.