Imperial of UK Welcomes OVL’s $2.58-billion bid

Imperial, though a little known company, is termed by many as a “bluechip petroleum engineering company”. It has assets in Russia with considerable proven reserves. OVL’s near victory over Sinopec comes after a number of aborted or failed attempts by OVL to grab a pie of the global oil equity. In the last couple of years, China’s aggressive bidding has seen it walk away with prized catches such as Encana in Ecuador, Petro Kazakhstan, Marathon Oil Corp and the BP-operated Block B in Angola.

This deal could be the mother of all takeovers in the Indian energy sector. OVL has valued Imperial at 1.4 billion pounds (around Rs 11,300 crore or $2.58 billion). Imperial, set up only four years ago, is an independent upstream oil exploration and production company focused on the Commonwealth of Independent States and, in particular, the Russian Federation. It is listed on the LSE. It made oil sales of $19.9 million and an operating loss of $39 million in 2007 as against $3.1 million and $ 15.2 million respectively in 2006.

Imperial directors also decided to recommend that Imperial convertible bondholders accept the convertible bond offer. “Imperial Energy’s directors are pleased to have been able to reach agreement with OVL and intend unanimously to recommend shareholders accept the proposed offer, which reflects a fair value and marks a premium of 62 per cent since the day before Imperial Energy first announced it had received an approach,” said Peter Levine, Imperial’s executive chairman.

As part of the deal, Imperial shareholders will be entitled to receive 1,250 pence in cash for each Imperial Energy share held, representing a premium of approximately 61.9 per cent to 772 pence, the closing mid-market price per Imperial Energy share on July 11, 2008 (being the last business day prior to the announcement that Imperial Energy had received an approach and the commencement of the offer period).

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