Presentation On Mergers And

Acquisition of ONGC And Imperial

Energy

• Guided by:
• Prof. salim G Sonnekhan Submitted by:
SDMCET Dharwad Karthik B Ghorpade
 ONGC

• ONGC Videsh, a Miniratna Schedule “A” Central Public Sector Enterprise

(CPSE) of the Government of India under the administrative control of the
Ministry of Petroleum & Natural Gas is the wholly owned subsidiary and
overseas arm of Oil and Natural Gas Corporation Limited (ONGC), the
flagship national oil company (NOC) of India. The primary business of
ONGC Videsh is to prospect for oil and gas acreages outside India, including
exploration, development and production of oil and gas.
 Continue....

• ONGC Videsh was incorporated as Hydrocarbons India Pvt. Ltd. on 5 March

1965 to carry out exploration and development of the Rostam and Raksh oil
fields in Iran and undertaking a service contract in Iraq. The company was
rechristened as ONGC Videsh Limited on 15th June, 1989 with the prime
objective of marketing the expertise of ONGC abroad. The nineties saw the
Company engaged in limited exploration activities in Egypt, Yemen,
Tunisia and Vietnam
 IMPERIAL ENERGY
• Imperial Energy Group is a part of Indian National Gas
Company, ONGC Videsh Ltd. (OVL). Imperial Energy includes 5
independent enterprises operating in the territory of Tomsk region
including 2 oil and gas producing enterprises

• Imperial Energy is a modern company focusing on efficient oilfield

development and long-term oil production growth.Scope of activities
and core assets of the company are clustered in the North and West part
of Tomsk region
 IMPERIAL ENERGY

• The head office of Imperial Energy is located in Tomsk. The company is

run by the skilled management team with working experience in more
than 18 countries. Executives and specialists of the company ensure
successful implementation of advanced technologies, project and
corporate management, and the best HSE practices.

• Imperial Energy employs 725 people, the majority of whom are

working at the oilfields of the company.
 ONGC-IMPERIAL ENERGY
• Oil & Natural Gas Corp., India's biggest exploration company, agreed to buy
Imperial Energy Plc for 1.4 billion pounds ($2.58 billion) to tap Siberian
deposits and make up for dwindling output at home.

• The cash offer of 1,250 pence a share is 61.9 percent more than Imperial
Energy's stock price on July 11, the day before the London-based company
said it received a bid, according to a statement distributed by Regulatory
News Service. China Petroleum & Chemical Corp. indicated today it may
bid for Imperial Energy.
• MOTIVES OF THE MERGER

The motives behind any merger/acquisitions are often numerous.

 They want to increase their market share, spread their costs and risks,
become more international and also for the need to transform their corporate
identity.

India's explorers have been outbid by Chinese rivals as the two most
populous nations compete for energy assets globally.

 The South Asian nation is looking to invest in oil projects in Russia,

Kazakhstan, Iran and Africa as the government expects economic growth to
accelerate to as much as 10 percent by 2012.
 ^

 Imperial would be biggest overseas acquisition for ONGC, which has as

much as 6.8 billion barrels of oil equivalent in reserves.

 The explorer paid $1.7 billion to buy a stake in Exxon Mobil Corp.'s Sakhalin-
I field in Russia and $785 million for a stake in the Greater Nile project in
Sudan, both in 2003. State-run ONGC owns 20 percent of Sakhalin-1, which
began pumping oil in 2005 and produced 250,000 barrels a day in February
2007.
 Scheme of
merger
Effective Date of 31st March 2010
Merger
Year of Merger 2010
Industry Acquiring company: Oil and Natural gas
Acquired company: Natural Gas
Type of Merger Horizontal with concentric merger (Product
Business Group Extension)
ONGC group
Exchange Ratio It has takeover of Imperial energy with about
2.1 billion.
.
Table showing Pre and Post-merger Key Indicators of
ONGC

Key indicators Pre-merger Post-merger % change

N P margin (in %) 26.82 28.38 105.81
RONW (in %) 23.13 28.38 122.69
Liquidity Ratio 220.68 272.39 123.4
Leverage Ratio 0.83 1.07 128.9
EPS (in Rs.) 88.46 38.58 43.61
DPS (in Rs.) 0.56 1.63 291.07
P/E Ratio 1.49 2.92 195.97
BVPS (in Rs.) 332.15 119.88 36.09
Share Price (in
Rs.) 128.66 91 70.72
 Table showing Pre and Post-merger Key
Indicators of Imperial energy
Key indicators Pre¬
merger Post-merger % change

N P Margin (in %)
25.07 26.84 107.06
RONW (in %) 23.33 17.18 73.63
Liquidity Ratio 2.99 2.43 81.27
Leverage Ratio 127.58 113.6 89.04
Sales (in crores) 60666 72328.25 119.22
R & S (in crores) 68286.33 101805.5 149.08
EPS (in Rs.) 75.54 38.58 51.07
DPS (in Rs.) 31.66 15.25 48.16
P/E Ratio 3.72 3.55 95.43
BVPS (in Rs.) 329.26 199.88 60.70
Share Price (in Rs.)
282.05 139.075 48.57
 Conclusion
 Mergers and Acquisitions (M&A) prime motive is to improve the value,
wealth and growth of the enterprise but in the current case it is been
observed that M&A has no effect on the company performance in Oil and
Gas sector
 It has been concluded that that there is no significant improvement
in financial and operating standards in post-merger period.

 The results have been raised which indicated that there is no significance
difference in the defined financial performance standards between pre-merger
and post-merger due to the significance value is greater than 0.05. Hence, this
study has accepted the null hypotheses which consider that there are no
significant improvements in surviving company’s performance post-merger and
acquisition and rejected the alternative hypothesis which considers that there is
significance improvement in surviving company’s performance post-merger and
acquisition activity.
THANK YOU