The union cabinet has accorded its approval to ONGC Videsh Ltd, the overseas investment arm of ONGC, India's largest oil explorer, to go ahead with the acquisition of UK-listed Imperial Energy.
The cabinet committee on economic affirs met Tuesday morning to approve the deal. There is no official word on the government's decision as yet. People who are in the know of the deal said that the cabinet clearance was taken so that OVL could meet the Tuesday midnight deadline set by UK authorities.
This would pave the way for OVL to make the open offer to the UK listed shareholders. The $2.1 billion deal will be one of the bigger deals by ONGC in recent times Imperial Energy has oilfields in Russia. OVL had sought to delay making the open offer but the request was rejected by the Takeover panel on Monday.
Analysts say the deal works out to around $2 to $2.5 a barrel for OVL given Imperial's declared reserves of 900 million barrels and will help improve India's energy security. India meets almost 70% of its oil demand through imports.ONGC is being advised by Deutsche Bank. Merrill Lynch is advising Imperial.
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