OVL gets cabinet nod for Imperial bid

ONGC Videsh (OVL), the overseas arm of state-run oil explorer Oil and Natural Gas Corporation Ltd, will go ahead with its $2.1-billion (£1.4 billion) bid for Imperial Energy, after the government gave its approval for making a final bid for the UK-listed company.

The cabinet committee on economic affairs (CCEA) today granted its approval for acquiring 100 per cent stake in Imperial Energy which has its assets in the Siberian region of Russia.

The approval was done at a specially convened meeting of the CCEA, chaired by prime minister Manmohan Singh, who also currently holds the  finance portfolio, to enable OVL meet today's deadline for making an open offer to shareholders of the UK-listed Imperial Energy.

The UK's takeover panel has already rejected ONGC's plea for more time to make a formal offer for acquisition of Imperial Energy Corp Plc.

ONGC Videsh's 1,250 pence a share bid for Imperial Energy was to give the company a 10 per cent internal rate of return (IRR) taking crude at $121 a barrel, but with crude prices at less than a third and the rupee depreciating by 20 per cent against the dollar, the IRR has come down to 3-4 per cent.

Imperial Energy, with oil assets in Russia's Siberia region, had proven oil reserves of the equivalent of 920 million barrels as of December 2007.

Shares of Imperial Energy, which registered the biggest fall in eight months in London trading on Monday, rose as much as 7.7 per cent to 915.5 pence today.