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Privatising BPCL: India invites bids, highest bidder will have to make 26% open offer

The open offer price will be the highest of the negotiated price under an agreement and volume-weighted average price paid by the acquirer.

SNS | New Delhi |

The government invited bids from both domestic and foreign suitors on Saturday for the sale of its roughly 53 per cent stake in the Bharat Petroleum Corporation Limited (BPCL), and they will have to make an open offer to public shareholders to acquire a minimum 26 per cent shares in the state-run company.

“The Government of India is proposing strategic disinvestment of its entire shareholding in BPCL comprising 114.91 crore equity shares, which constitutes 52.98 per cent of BPCL”s equity share capital, along with transfer of management control, to a strategic buyer (except BPCL”s equity shareholding of 61.65 per cent in Numaligarh Refinery Limited),” the bid document said.

The last date for submission of expressions of interest for the strategic sale of BPCL is May 2 and the interested suitors must have a minimum net worth of $10 billion, the bid document released by the Department of Investment and Public Asset Management stated.

The open offer price will be the highest of the negotiated price under an agreement and volume-weighted average price paid by the acquirer and persons acting in concert (PAC) in the 52 weeks preceding the public announcement for open offer.

The open offer price can also be the highest price paid by the acquirer or PAC for any acquisition during the 26 weeks preceding the PA.

The other formula is Volume Weighted Average Price (VWAP) over the 60 trading days prior to the date of the PA (for frequently traded shares), the bid documents said.

The CSB (Confirmed Select Bidder) will not be allowed to make the open offer, conditional on any minimum level of acceptance. It will be required to put in escrow in cash the entire consideration payable under the open offer, assuming full acceptance of the open offer.

As of December 31, BPCL shareholding includes government of India’s 52.98 per cent, BPCL Trust’s 9.33 per cent, LIC’s 5.84 per cent, FPIs’ 14.07 per cent, Mutual Funds’ 11.44 per cent and others 6.34 per cent.

Acquisition of the majority stake by the bidder would need to comply with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Accordingly, the bidder will need to offer to acquire additional stake from other shareholders via the open offer as per the Takeover Regulations, the bid document said.

On Friday, each BPCL share was priced at Rs 400.80.

The current SEBI norms are that acquisition of an aggregate of 25% or more shares or voting rights in a listed entity would trigger an open offer and also acquisition of control would trigger an open offer. The size is minimum of 26% shares or voting rights of the target company.

The government has appointed Deloitte Touches Tohmatsu India LLP as its transaction advisor to advise on and manage the strategic disinvestment process.

(With input from agencies)