State-owned Oil and Natural Gas Corporation (ONGC) will pay Rs 36,915 crore for a 51.11 percent stake in Hindustan Petroleum Corporation (HPCL), the former said in a filing to stock exchanges.
ONGC will pay Rs 473.97 per share and will complete the acquisition of government's stake in HPCL by January end.
A purchase by ONGC provides the government an opportunity to offload its stake in HPCL without a huge dilution in control, as the government holds a majority stake in ONGC too.
The deal was a part of the government's effort to create an integrated energy behemoth and also to meet the hefty Rs 72,500-crore disinvestment target it had budgeted for this fiscal.
However, the deal has been delayed repeatedly over the past year due to obstacles in getting clearances, and due to valuation concerns and lack of money with ONGC to execute the deal.
Divestments so far this year have garnered Rs 53,800 crore for the government and with this deal in the bag, its target of Rs 72,500 crore for the year is taken care of.
According to CNBC TV18, the government has now revised its disinvestment target for FY18 to around Rs 92,000 crore.
Speaking about the acquisition, the finance ministry on Saturday said that ONGC will now have presence across the entire value chain and will become the country's first vertically-integrated oil major.
Even after the deal goes through, HPCL will continue being a central public sector enterprise.
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