REC surges 2%, PFC declines 2% on merger reports

NEW DELHI: Shares of REC surged over 2 per cent and Power Finance Corporation (PFC) shares declined over 2 per cent in early trade on Wednesday after the government proposed that PFC acquire REC in a Rs 14,000-crore deal.

The move is seen as a surprising reversal of the previous plan of REC taking over PFC.

As reported by ET, until last week, the government was considering the acquisition of PFC by REC followed by a merger, since it would have fetched more money given the government’s larger stake in the former, which also has a higher market value.

“The power ministry had flagged concerns of the impact of the deal on two sound Navratnas in the otherwise ailing power sector, but said if the finance ministry still wants to carry out the exercise, then PFC should acquire REC,” ET quoted a senior government official as saying.

Around 9:45 am, shares of REC were trading at Rs 107.75, up 1.27 per cent, whereas those of PFC were trading 1.28 per cent down at Rs 96.25.