French energy giant Total SA is advancing on a deal to acquire a 30% stake in city gas distribution (CGD) company Adani Gas for over $800 million, or upwards of Rs 5,500 crore. The deal, which is likely to be announced shortly, would help the infrastructure conglomerate to pare debt and bring in strategic expertise into an expanding business, people directly aware of the matter said.
The deal depending on its contours is expected to trigger an open offer to public shareholders. After that, billionaire promoter Gautam Adani and Total might have roughly equal shareholding, based on how much the latter mops up through the open offer. So the deal size could be well above $1 billion.
Adani currently owns almost 75% stake in the gas company, which was listed on the bourses only six months ago. Adani Gas operates a distribution pipeline network of over 6,000 km and caters to nearly 3.5 lakh retail customers. It runs city gas distribution in five geographies Ahmedabad, Baroda, Faridabad, Khurja and Palwal. The company, through its JV with Indian Oil Corporation, is present in another eight locations, including Chandigarh and Ernakulam, besides a right to develop CGD in 38 other geographies. At close of Thursdays trading hours, a 30% stake in Adani Gas is valued at over Rs 5,500 crore. The deal is expected to be done at a premium to the prevailing market price of Rs 169 apiece.
An emailed query sent to Total didnt elicit any reply. An Adani spokesperson said, As a part of the companys business growth strategy, we continue to evaluate various viable options. The company, however, doesnt comment on speculation.
The deal comes after Total and Adani Group entered into a strategic partnership in October to develop various regasification LNG (liquefied natural gas) terminals, including Dhamra LNG, besides a joint venture to set up 1,500 service stations. The people cited earlier said Total has broader plans with the conglomerate in the Indian energy sector and has been evaluating partnership in various segments beyond LNG and fuel retail.
Total, one of the seven big oil companies in the world that includes BP and ExxonMobil, had revenues of $210 billion and a net profit of $11 billion in 2018. The company, listed on the New York Stock Exchange and Euronext, has a market capitalisation of over $142 billion.
The deal comes at a time when Adani group is expanding into new areas in infrastructure like airports and could be one of the first moves to induct global strategic partners in different businesses. Adani has a joint partnership with Singapore-based agri-business major Wilmar for the edible oil business.
Adani Gas saw operating revenues increase by 32% to Rs 1,823 crore for the year ending March 2019 with profit after tax moving up 39% to Rs 229 crore.
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