Reliance Industries on Monday offered its one share for every 16 held in Reliance Petroleum to absorb the refining unit in an share merger deal that is valued at an estimated Rs 8,500 crore.
The move that will catapult RIL to top 20 oil refiners in the world with a market capitalisation of about $47 billion at present price level, however, saw investors in both the Mukesh Ambani Group companies losing nearly Rs 6,800 crore in a day as share prices declined on the Bombay Stock Exchange.
RIL chairman Mukesh Ambani said "this merger follows Reliance Industries' philosophy of creating enduring value for all our shareholders".
As part of the merger deal approved by the boards of the two companies, RIL will issue 6.92 crore new shares-- which are worth about Rs 8,500 crore at current market prices. However, the record date for the share transaction has not been disclosed yet.
After the share-swapping, RIL would have 3.7 million shareholders and the promoters holdings, including that of its chairman Mukesh Ambani, will fall by 2 per cent to 47per cent.
RIL is holding of 70.38 per cent in RPL which would be cancelled on absorption.
This is the fourth instance where RIL has absorbed one of its subsidiaries, the previous one being 7 years ago when Reliance Petroleum was merged with it.