Putting to rest the speculations on re-opening of its $2.6 billion deal to acquire Imperial Energy Plc, ONGC Videsh Limited (OVL) said on Monday that it has not received any advice from the government to back out from the deal.
?We are rather inching close to completing the acquisition of Imperial Energy. The first set of approvals relating to anti-monopoly regulations have been received by us from Russia?s Federal Anti-monopoly Service (FAS) to acquire Imperial Energy. The second approval or the foreign investment approval from the Russian authorities, required for acquiring more than 25% stake in a company having assets in Russia, is also expected shortly,? said a senior OVL official.
In a statement issued on Monday, OVL said that the FAS has announced on its website that it has granted its approval of the offer to buy Imperial Energy in respect of the anti-monopoly regulations. However, the pre-conditions remain to be satisfied and a further announcement regarding these will be made in due course. OVL said that it needed Moscow to agree that Imperial Energy?s assets were not strategic, and that the takeover did not breach restrictions on foreign state-controlled firms buying Russian companies.
The shares of Imperial Energy, which had gained 24% on November 7, tumbled on the London Stock Exchange on Monday morning after reports in a section of the press that the Indian government wants ONGC to pay less than the agreed price of $2.6 billion because oil prices, since the deal was announced in July, have fallen 45%. Imperial Energy fell 107.5 pence, or 10%, to 957.5 pence in the morning on the LSE.
Commenting on OVL?s bid price of $2.6 billion for acquiring Imperial, a senior company official said, ?There is no question of re-negotiating the Imperial Energy deal. We have not received any advice from the government to back out from the deal.?
Confirming that the petroleum ministry did ask OVL about a month back to take a legal view on whether due to falling crude oil prices there exist a possibility to re-negotiate the price, the official said, ?OVL?s legal advisors have clarified that the deal cannot be re-opened due to fall in crude oil prices. Imperial remains an attractive asset even at the current prices. We have communicated the same to the petroleum ministry long time back. There is no fresh re-thinking at this stage and we are just awaiting appropriate approvals from the Russian regulatory authorities.?
Citing the example of Ranbaxy-Daichi deal, the official said, ?The price of Ranbaxy was much higher when the deal was done with Daichi. However, by the all regulatory approvals were in place, the price of Ranbaxy had crashed to much lower levels. But the deal still went through with any re-negotiations. Similarly, OVL is not presing for any re-negotiation.?
ONGC?s cash offer of 1,250 pence ($19.78) a share was 61.9% more than Imperial Energy?s stock price on July 11, the day before it first announced that it had received a bid. In a communication to the LSE, ONGC had clarified on November 7 that none of the pre-conditions to the Imperial offer have been satisfied and that the filing made with the FAS of the Russian government in respect of anti-monopoly regulations remains under consideration by the FAS.