Reliance Power, RNRL to talk merger tomorrow
Anil Ambani controlled boards of Reliance Power (RPower) and Reliance Natural Resources (RNRL) will consider a merger on Sunday. They are continuing a series of corporate actions that started after Anil and elder brother Mukesh announced the truce on May 23.
According to analysts, this move, is imminent as RNRL, was formed to buy natural gas from Mukesh’s Reliance Industries and transmit it to power plants owned by Anil. With the ruling of the Supreme Court that the government would have the final say in the pricing and distribution of the fuel, they did not have a viable business
According to Deven Choksey, managing director of KR Choksey Securities, the gas dispute is resolved, so there can’t be any reason for the Anil Dhirubhai Ambani Group (ADAG) to continue RNRL in its present form, but RNRL shareholders should be compensated by the promoter group as the company’s plea to get gas at a cheaper rate was squashed by the apex court. ET NOW, broke the story on Friday afternoon.
As the ruling of the gas case went in Reliance Industries’ favor, RNRL had no reason to exist, so the decision of it getting merged had to be taken or else it would have collapsed, said SP Tulsian, a Mumbai-based investment analyst, who tracks the Mukesh and Anil Ambani groups closely.
According to Tulisan, as both companies have no operational history, the merger swap ratio of the companies should be on the basis of book value. On that basis, the share-swap ratio should be 5:1
But according to the chief financial officer of a large company, who tracks markets closely, said the swap ratio should be 4:1 taking into account the market value of the stocks. The CFO did not wish to be named.
The R-Power stock closed at Rs 175, gained 3.3%, and had put the market capitalization, the value of total shares at the ruling market rate, at Rs 41,979 crore. The RNRL stock closed at Rs.63.65 and lost nearly 2%. The company’s market capitalization stands at Rs 10,394 crore.
