Essay About Results Of The Bid And Minister Of Divestment

Acquisition of Ipcl by Reliance
Acquisition of Ipcl by Reliance
Acquisition of IPCL by Reliance
The expected had happened unexpectedly. While everyone expected Reliance to bid
for IPCL aggressively, but what an aggression!!
The results of the bid, for 26%of equity, announced on 18th May 2002, were:
Rupees/share
Reliance Industries Ltd (RIL) 231
Indian Oil Corp (IOC) 131
Nirma 110
The bid price was at a 74% premium to IPCL’s last traded price.
There were wide spread speculations on why Reliance bid was so higher than the other
bidders.
One newspaper had the explanation :
“Market circles are still struggling to come to terms with the surprise of Reliance bidding so
aggressively for IPCL. The bid – more than twice the reserve price when the rivals were under it –
is certainly not characteristic of RIL, which has established a reputation as a conservative bidder,
whether in privatisation deals or in telecom licenses. So what explains the exception? The RIL
grapevine has it that after the consultants had submitted their valuation of IPCL, the two brothers
decided to add on a premium to play safe. The patriarch then intervened to add on a further
premium. This one, he apparently observed, was as a mark of gratitude to the Disinvestment
Minister for not putting a spanner in the works despite a history of hostility between Shourie and
RIL dating back to the eighties.”
Mr. Arun Shourie, Minister of Divestment, had something interesting to say :
“During the privatisation of IPCL my ministry came under a lot of pressure to prevent Reliance
from bidding for it. There were attempts to disqualify the group from the bidding process, to the
extent that the entire disinvestment process came to halt. But I went by the Government policy
which clearly specifies that if the bidder fulfils all the norms, he will be eligible,” the minister said.