On 10 March 2007, the board of
Reliance Industries approved a 1:5 share swap ratio for merging Indian
Petrochemicals into RIL. Shareholders of IPCL will get one share of Reliance
Industries for every five shares of IPCL.
The merger will be earnings accretive
for RIL shareholders and shall provide shareholders of IPCL an opportunity to
participate in RIL's diversified portfolio. The exchange ratio has been
determined on the basis of a valuation report by PricewaterhouseCoopers and
Ernst & Young. Post-amalgamation, the combined entity, taking 2005-06
financials, will have an annual net turnover of Rs.92,143 crore (RIL
Rs.81,211crore) and a combined net profit of Rs.10,233 crore (RIL Rs.9,069
crore).
Reliance, which acquired its initial
26 per cent stake in IPCL in 2002 under the Government's divestment programme,
currently holds around 47 per cent stake in the company. The share capital of
RIL post-merger shall increase from Rs.1,393.5 crore to Rs.1,453.6 crore.
Also See:
RIL plans to merge
IPCL with itself (08-Mar-07)