India's top private firm Reliance Industries Ltd board on Saturday fixed a one-for-five share swap ratio for absorbing its unit Indian Petrochemicals Corp Ltd (IPCL) a statement said.
"This merger will be earnings accretive for the shareholders of Reliance and shall provide shareholders of IPCL an opportunity to participate in Reliance's diversified business portfolio," the company's chairman Mukesh Ambani said in a statement. IPCL shareholders will get one share of Reliance Industries for every five held, the statement said.
IPCL's amalgamation with itself would boost Reliance's share capital to 14.54 billion rupees ($329 million) from present 13.94 billion, the company said. Reliance, the world's number one maker of polyester and fibre yarn, said the amalgamation would insulate IPCL, largely a polymer maker, from earnings volatility and cyclical risks of the global petrochemicals industry.
It said the move was in line with industry trend and will enhance Reliance's financial strength to pursue organic and inorganic growth opportunities in India and abroad. Reliance owns 47.3 percent of IPCL along with its associate companies at present. "These shares will be exchanged for Reliance's equity shares having a current market value of over 37 billion rupees, and will constitute 2 percent of the company's enhanced equity share capital," the statement said. "These shares could be offered to financial or strategic investors in domestic and international markets," it added.