GSPC to buy BG stake in Gujarat Gas for Rs 2,460 cr

Gujarat government firm GSPC will acquire British energy major BG Group Plc's majority stake in Gujarat Gas Co Ltd (GGCL) for over Rs 2,460 crore, a 12 per cent discount to the market price.

The sale of its 65.12 per cent stake in the nation's biggest private gas distributor will be completed in the first half of 2013, the Reading, England-based company said in a statement on Wednesday.

GSPC Distribution Networks Ltd (GDNL), a subsidiary of Gujarat State Petroleum Corp (GSPC), will buy GGCL shares at Rs 295 apiece and it will pay Rs 2,463.8 crore to BG Group for the acquisition, GSPC said in a separate statement.

The sale price implied a 12 per cent discount to GGCL's current market value. At closing, GGCL fell 2.1 per cent to Rs 336, giving the company a market value of about Rs 4,310 crore.

GGCL had touched a 52-week low of Rs 288 in June this year, while it had scaled highs of Rs 458.85 in November.

As per SEBI regulations, GSPC will have to make a mandatory open offer for a minimum of 26 per cent of GGCL.

Citi advised BG, while Rothschild advised GSPC.

"We are pleased to announce this acquisition that enhances GSPC Group's presence in the state. The acquisition is in the long-term interests of the industrial and retail customers of Gujarat," GSPC Group Managing Director Tapan Ray said.

GCCL supplies gas to more than 3.49 lakh domestic, commercial and industrial customers and serves over 1,75,757 compressed natural gas (CNG) users. It has network of around 49 CNG stations in Bharuch, Ankleshwar, Surat and surrounding areas in Gujarat.

The stake sale in GGCL meant BG had now agreed disposals worth $4 billion, edging it closer to a $5 billion target.

"With this announcement, we have non-core asset sales agreements in place that will release some $4 billion from our balance sheet, BG's Chief Executive Officer Frank Chapman said in the statement.

In February, BG announced plans to sell off assets in downstream distribution and power generation to enable it to channel resources into more lucrative upstream oil and gas production projects.