MUMBAI: The boards of directors of Reliance Industries Ltd (RIL) and Indian Petrochemicals Corporation Limited (IPCL) have approved the scheme of merger of IPCL with RIL on Saturday.

"The appointed date of merger of IPCL with RIL is April 1, 2006. Under the terms of the proposed merger, IPCL shareholders will receive one share of RIL for every five shares of IPCL held by them," RIL stated in a release after its board meeting here. The share capital of RIL post-merger will increase from Rs. 1,393.50 crore to Rs. 1,453.60 crore, it added.

The exchange ratio has been determined on the basis of a valuation report by PricewaterhouseCoopers and Ernst & Young.

Commenting on the merger, Mukesh D. Ambani, Chairman and Managing Director, RIL, said, "This merger will create value through synergies and scale that shall enhance the sustainable competitive advantages of RIL. This merger will be earnings accretive for the shareholders of RIL and shall provide shareholders of IPCL an opportunity to participate in RIL's diversified business portfolio."

RIL's associate companies hold 47.3 per cent of IPCL's equity share capital.

These shares will be exchanged for equity shares of RIL having current market value of over Rs. 3,700 crore, and will constitute two per cent of the enhanced equity share capital of RIL.

"The associates will hold the shares for the benefit of all the shareholders of RIL and can monetise the economic value at an appropriate time. These shares can be offered to financial or strategic investors in the domestic or international markets," the release said.

The board of RIL approved an interim dividend of Rs. 11 per share amounting to Rs. 1,748 crore, including dividend tax.

The directors of IPCL have approved an interim dividend of Rs. 6 per share amounting to Rs. 206 crore, including dividend tax.

Printer friendly page  
Send this article to Friends by E-Mail