ONGC finalises Imperial Energy acquisition terms

27 August 2008

Mumbai: Oil and Natural Gas Corporation (ONGC) of India has agreed to buy Imperial Energy of the UK for £1.4 billion ($2.6 billion), in perhaps its first acquisition of a major exploration and production company with overseas assets.

The cash offer values Imperial, which has oil and gas assets in Russia and Khazakistan, at £12.50 a share - a 62 per cent premium to Imperial's share price on London's Alternative Investment Market on 11 July, the day before OVL, the overseas arm of ONGC announced the offer.

''Imperial Energy's directors are pleased to have been able to reach agreement with OVL and intend unanimously to recommend shareholders accept the proposed offer, which reflects a fair value and marks a premium of 62 per cent since the day before Imperial Energy first announced it had received an approach, Peter Levine, executive chairman of Imperial Energy, said.

Bidco, the bidding arm of OVL, had first proposed a bid of around £12.90, but the oil price fall since then and a worsening investment climate in Russia have kept bidders off.

On Tuesday, the boards of OVL and Imperial Energy announced having reached agreement on the terms of a recommended pre-conditional cash offer, to be made by Bidco, for the entire issued and to be issued ordinary share capital of Imperial Energy.

The two boards have also reached agreement on the terms of a recommended pre-conditional cash offer for the bonds and share offer for Imperial Energy under which Bidco will offer to acquire the Imperial Energy.