Essar Oil shares edged highest on Tuesday amid a delisting offer that started today. Essar Oil, India’s second-bigger private refiner, has set a floor price of Rs 146.05 a share to buy out minority shareholders.
The company owns India’s second large single-site refinery at Vadinar (Gujarat) which has a capacity of 20 MMTPA. The floor price is around 30 per cent less than recently market price. The reverse book-building offer will end on December 21.
In a reverse book-building process shareholders tender their shares at prices of their choice. And based on the preference of the majority of the shareholders, a delisting price is fixed. But the delisting price cannot go below the floor price fixed by the company.
Promoters hold 71.46 per cent stake in Essar Oil while institutional investors like mutual funds, banks, foreign institutional investors own around 17 per cent. The rest is held by retail investors.
The Essar Oil require 17.6 per cent shares to be tendered in book-building offer.
Essar Oil think to delist from local stock exchanges by buying out the non-promoter shareholding to give its promoters greater flexibility. Earlier this year, Russia’s top oil manufacturer Rosneft has signed a preliminary deal to acquire up to 49 per cent in Essar Oil.
Essar Oil had earlier said that it will make good to the minority shareholders, the difference between the delisting offer price and the rate at which it sells 49 per cent stake to Rosneft.
Ruias-promoted Essar Oil reported a 14 per cent fall in net profit to Rs 201 crore in the September quarter.
The group has lately delisted Essar Energy from the London Stock Exchange and also made its domestic listed ports business private.
At 12:10 p.m., shares of Essar Oil was up 0.90 per cent at Rs 211.60, outperforming flat broader markets.