Date:23/12/2004 URL: http://www.thehindubusinessline.com/2004/12/23/stories/2004122302160200.htm

Back IOC-IBP merger swap ratio at 125:100

Our Bureau

New Delhi , Dec 22

INDIAN Oil Corporation (IOC) today approved a share swap ratio for merging its subsidiary IBP Company Ltd with itself.

"Our board of directors has approved a swap ratio of 125:100, that is 125 equity shares of IOC would be offered for every 100 equity shares of IBP,'' the IOC Chairman and Managing Director Mr M.S. Ramachandran, told newspersons here today.

The amalgamation will increase IOC's share in the domestic market to 61 per cent and help save the company around Rs 45 crore per annum in overhead expenses, according to company officials.

The merger will now require the formal approval of the Government, the majority owner in IOC. The entire process is likely to be completed by March 2005, according to Mr Ramachandran.

Post merger, Government shareholding in IOC will fall by 1.91 per cent to 80.12 per cent and IOC will retain the IBP brand.

"IBP will function as a division of IOC. IBP petrol pumps network will continue to be expanded along with our own network,'' Mr Ramachandran said.

"As a result of the merger, we will save on transaction cost on stock (petroleum products) IOC transfers to IBP for sale through its network,'' he added.

Defending the swap ratio, Mr Ramachandran said that it was a very fair arrangement. "We took into account six months average to decide the ratio. On current prices, the swap should have been 111:100 but our ratio has been generous towards IBP shareholders,'' he argued.

IOC bought Government's 33.58 per cent equity in IBP in 2002. It further acquired another 20 per cent through an open offer to make the stand-alone marketing company its subsidiary.