RNRL plunges, RPower jumps on share swap deal
Share swap deal values RNRL at $1.5 bn. RNRL falls as much as 28%. RPower gains as much as 8.4%, highest in a year. Top 5 picks | Mid-term picks | Gainers & losers
By Agencies |
MUMBAI: Anil Ambani-led Reliance Natural Resources ( RNRL) today tanked over 28 per cent in the early trade, a day after its board approved the company's merger with sister firm Reliance Power, whose shares climbed above 8 per cent.
In a volatile market, shares of ADAG firm RNRL slipped as much as 28.51 per cent to touch a-month low of Rs 45.50 on Bombay Stock Exchange. Later, the scrip was trading at Rs 47.05, down 26.08 per cent at 0945 hrs.
Yesterday, in a Rs 50,000-crore all-stock merger deal, the boards of R-Power and RNRL approved an exchange ratio of one equity share of R-Power for every 4 equity shares of RNRL.
In a sharp contrast to RNRL, shares of Reliance Power zoomed 8.36 per cent to touch a high of Rs 189.80 on BSE.
The 30-share BSE benchmark Sensex was trading at 17,457.14 points, down 0.02 per cent from previous close.
Following the merger, the current valuations peg the market cap of the combined entity at over Rs 52,000 crore. At the end of Friday's trade, the market cap of R-Power stood at Rs 41,979 crore and of RNRL at Rs 10,394 crore.
Reliance Natural lost a May ruling by Supreme Court in a gas supply dispute with Reliance Industries, controlled by Anil's elder brother, Mukesh Ambani, the world's fourth-richest man. Analysts say there was no reason for Reliance Natural to exist independently following the court's verdict as it would not receive gas at a cheaper rate than the government-approved price. "The merger was a given, it was just a matter of time," Sonam Udasi, head of research at IDBI Capital, said.
"RNRL was just a shell company, and after the court verdict, it couldn't have sold gas at a lower price, so it had to be absorbed," he said. Reliance Natural had wanted Reliance Industries to honour a private deal between the brothers, struck when the Reliance empire was split, to supply it with 28 million standard cubic metres of gas for 17 years at $2.34, about half the government-set price.
Supreme Court ordered the companies to renegotiate the agreement at the government-approved price. Late last month, Reliance Natural and Reliance Industries said they signed a revised gas supply agreement, but did not disclose details. The gas is critical for Anil Ambani's power business, including projects being built by Reliance Power. Reliance Power went public in early 2008 in a $2.9 billion IPO -- India's biggest -- but has never risen above its issue price.
Reliance Industries operates the country's biggest gas find, in the D6 block of the Krishna Godavari basin off India's east coast. The government determines who gets the gas from the field and at what price.
In a volatile market, shares of ADAG firm RNRL slipped as much as 28.51 per cent to touch a-month low of Rs 45.50 on Bombay Stock Exchange. Later, the scrip was trading at Rs 47.05, down 26.08 per cent at 0945 hrs.
Yesterday, in a Rs 50,000-crore all-stock merger deal, the boards of R-Power and RNRL approved an exchange ratio of one equity share of R-Power for every 4 equity shares of RNRL.
In a sharp contrast to RNRL, shares of Reliance Power zoomed 8.36 per cent to touch a high of Rs 189.80 on BSE.
The 30-share BSE benchmark Sensex was trading at 17,457.14 points, down 0.02 per cent from previous close.
Following the merger, the current valuations peg the market cap of the combined entity at over Rs 52,000 crore. At the end of Friday's trade, the market cap of R-Power stood at Rs 41,979 crore and of RNRL at Rs 10,394 crore.
ADVERTISEMENT
Reliance Natural lost a May ruling by Supreme Court in a gas supply dispute with Reliance Industries, controlled by Anil's elder brother, Mukesh Ambani, the world's fourth-richest man. Analysts say there was no reason for Reliance Natural to exist independently following the court's verdict as it would not receive gas at a cheaper rate than the government-approved price. "The merger was a given, it was just a matter of time," Sonam Udasi, head of research at IDBI Capital, said.
"RNRL was just a shell company, and after the court verdict, it couldn't have sold gas at a lower price, so it had to be absorbed," he said. Reliance Natural had wanted Reliance Industries to honour a private deal between the brothers, struck when the Reliance empire was split, to supply it with 28 million standard cubic metres of gas for 17 years at $2.34, about half the government-set price.
Supreme Court ordered the companies to renegotiate the agreement at the government-approved price. Late last month, Reliance Natural and Reliance Industries said they signed a revised gas supply agreement, but did not disclose details. The gas is critical for Anil Ambani's power business, including projects being built by Reliance Power. Reliance Power went public in early 2008 in a $2.9 billion IPO -- India's biggest -- but has never risen above its issue price.
ADVERTISEMENT
Reliance Industries operates the country's biggest gas find, in the D6 block of the Krishna Godavari basin off India's east coast. The government determines who gets the gas from the field and at what price.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
