Page 41 - Plastics News July 2017

BUSINESS NEWS

Cabinet may decide on HPCL Klöckner Pentaplast completes

stake sale to ONGC this month acquisition of Linpac Group

he Cabinet is likely to consider this month sale of
Tgovernment's 51 per cent stake in Hindustan Petroleum he Klöckner Pentaplast Group has completed the
Corp Ltd to Oil and Natural Gas Corp for over Rs 26,000 Tacquisition of UK-based Linpac Senior Holdings Ltd
crore. According to reports the Department of Investment and its subsidiaries, the two companies announced on 3
and Public Asset Management (DIPAM) in the Ministry July. The transaction will create a global player in the
of Finance is moving a note for consideration of the rigid and flexible film market, with annual revenues
Cabinet for divesting government's entire 51.11 per cent exceeding $2bn (€1.7bn).The companies had previously
announced the deal, which combines two global plastics
packaging companies, on 7 April. Linpac and KP are
already owned by investment firm Strategic Value
Partners LLC, and the deal may foreshadow an initial
public offering for the combined company later this
year. The US SVPGlobal specialises in distressed debt
and value investments.Klöckner Pentaplast will continue
to be led by Wayne Hewett. Daniel Dayan, former CEO
of Linpac, will lead KP’s food and consumer packaging
division Linpac is based in Birmingham, UK and has been
owned by SVPGlobal since 2015.
shareholding in India's third-biggest fuel retailer HPCL to A Reuters report in November last year suggested that
oil producer ONGC. The Cabinet may take up the proposal SVPGlobal was trying to sell Linpac, and that the price
this month. After the Cabinet nod, the government will tag could be $555m (€487m).SVPGlobal also tried to sell
move to appoint valuation and transaction advisers while Montbaur, Germany-based Klöckner Pentaplast in 2014,
ONGC too may decide to hire merchant bankers to arrive but took the firm off the market when bids came in well
at the valuation of government shareholding. After few below the asking price of $1.9bn (€1.6bn). SVPGlobal
rounds of inter-ministerial consultations, DIPAM is now bought KP in 2012 for debt and equity of $1.3bn
approaching the Cabinet for a nod for the transaction, (€1.14bn).KP has been planning an initial public offering
the source said, adding the transaction is likely to be but the deal may delay the process.The transaction also
completed within this fiscal year. ONGC has a cash will further develop KP’s offerings in end markets such as
reserve of Rs 13,014 crore and to fund the government pharmaceuticals, food and beverage, and consumer and
stake acquisition in HPCL, it will have to borrow at least
Rs 10,000 crore.
HPCL on the other hand has a market cap of Rs 51,764.25
and buying government's entire 51.11 per cent stake
would entail an outgo of Rs 26,450 crore. Another Rs
13,450 crore or so would be required in case open offer
for an additional 26 per cent has to be made. It is also
learnt that while initially the government was looking
at creating an integrated oil company through merger
of an oil producer with a refiner, the idea was dropped
Similar differences in work culture and ethos prevail
in upstream and downstream firms and so the exercise
under consideration now is to only help government mop industrial products.The strategic rationale behind the
up resources and HPCL would become a mere subsidiary move is to create a one-stop-shop with the combination
of ONGC. of the two film production capabilities.

41 July 2017 | Plastics News