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Sweet deal for RNRL shareholders? Marketmen divided

RNRL shareholders must be feeling shortchanged, as they will get one share of R-Power worth Rs 175.1, 45 per cent less than the combined value of Rs 254.6 for four shares they exchange under the merger deal approved today.

business Updated: Jul 04, 2010 18:48 IST

RNRL shareholders must be feeling shortchanged, as they will get one share of R-Power worth Rs 175.1, 45 per cent less than the combined value of Rs 254.6 for four shares they exchange under the merger deal approved on Sunday.

In the last trading session, Reliance Power closed at Rs 174.50 a piece, whereas shares of RNRL ended at Rs 63.65.

Market analysts have given a mixed opinion about the deal. While some brokers said the deal is good for both ADAG firms, some said R-Power shareholders have an upper hand.

RNRL shareholders, including promoters, will get R-Power shares worth about Rs 7,150 crore, as per the current market prices. Out of these, the promoters would get shares worth over Rs 3,600 crore.

"In terms of business value, the merger deal is good for RNRL... (who) will have more share in ADAG's power projects. Till present, the scrip is more like a trading firm, but post-merger, its value will grow," Angel Broking Vice-President, Research, Sarabjit Kour Nangra said.

However, some analysts said the deal value is not so lucrative for RNRL shareholders and will be sweet only after the share price of R-Power breaches the combined value of four shares of RNRL.

"RNRL shareholders would have been at better position if the share exchange ratio value was more sweet," said a broker on the condition of anonymity.

The current valuation pegs the market cap of the combined entity at over Rs 52,000 crore. At the end of Friday's trade, the market cap of R-Power stood at Rs 41,979 crore and of RNRL at Rs 10,394 crore.

In a Rs 50,000-crore mega deal, the Anil Ambani Group on Sunday announced the merger of RNRL with Reliance Power, which will now become a direct beneficiary of the gas deal signed with Mukesh Ambani-led Reliance Industries.

As part of the all-stock deal which was approved by both the boards, R-Power will give one of its shares for every four held in RNRL.

Exhibiting a volatile movement on the Friday on the BSE, shares of RNRL ended 2 per cent down at Rs 63.65 a share, but R-Power managed to close 3 per cent up at Rs 174.50 a piece.