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India's Reliance may merge with IPCL to make petrochemicals giant
AFP
MUMBAI
Petroleumworld.com 03 09 07
Reliance Industries, India's largest oil refiner, said Thursday it may buy the outstanding shares of Indian Petrochemicals Corp it does not already own to create a petrochemicals giant.
The boards of both companies will meet Saturday to consider the merger plan, the companies said in a statement to the Mumbai stock exchange.
The move to bring the petrochemical businesses under a single roof would create an integrated petrochemical business worth close to 500 billion rupees (11.25 billion dollars) in sales.
Reliance Industries Ltd. (RIL), led by Mukesh Ambani, was up 34.15 rupees or 2.65 percent at 1,323.50 rupees in early afternoon trade on the back of the announcement. IPCL gained 34.85 or 15.04 percent to 266.50 rupees.
The benchmark Mumbai stock exchange Sensex index was up 313.21 points or 2.49 percent to 12,892.93 points.
The merger would leverage the companies' balance sheets to raise money to buy assets abroad as well as streamline operations and provide major tax savings, media reports said.
Reliance declined to elaborate on the statement.
Reliance Industries purchased a 26 percent stake in IPCL five years ago and has since raised its holding to 46 percent.
The proposed move was seen by analysts as a precursor to a possible wider restructuring of the Reliance group.
"This merger was long overdue," Kenin Jain, an analyst with ASK Raymond James told India's Economic Times "It will complete the entire value chain of petrochemical products for Reliance."
Reliance now supplies raw materials to IPCL which then makes final products for end user industries.
AFP 08 0952 GMT 03 07
Copyright© 2007 AFP. All Rights Reserved.
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