Valero Energy stock plummets after RIL denies acquisition rumours
01 November 2011
The stock price of US-based Fortune 500 oil and gas refining company Valero Energy plummeted 7 per cent yesterday after Reliance Industries (RIL) scotched media rumours that it plans to buy the company
"...Reliance wishes to dispel the rumors and announce that it is not in discussions with Valero nor otherwise considering an acquisition of Valero," Mumbai-based RIL said in a statement yesterday.
The UK's Daily Mail newspaper reported last Wednesday that Mukesh Ambani-run RIL is in talks to acquire San Antonio, Texas-based Valero Energy, valuing the largest US refiner at $27 billion.
It said that RIL may bid $48 per share, a hefty 85-per cent premium to Valero's current share price of $26 per share or more than double its market value of $12.5 billion as of the close of trading when the news broke out.
Shares of Valero gained 18 per cent since the news surfaced, the most since 21 November 2008, to close at $26 in New York on 27 October and fell to $24.70 in yesterday late morning New York Stock Exchange trading.
Although armed with $12.6 billion of surplus cash, analysts had doubted that RIL would pay such a significant premium for the transaction.