French energy giant Total SA has agreed to buy a 37.4% stake in Adani Gas Ltd for as much as Rs 6,154.75 crore ($868.5 million), the two companies said on Monday.
Total has made an open offer to public shareholders of Adani Gas to acquire a stake of up to 25.2% and will purchase the remaining stake from the family of billionaire Gautam Adani, according to stock-exchange filings.
The French company has offered to buy shares from public shareholders at Rs 149.63 apiece. That’s 8.7% higher than Friday’s closing price. Shares of Adani Gas jumped to a high of Rs 162.40 in early morning trade on Monday.
The Adani family and Total shareholders will ultimately hold 37.4% each in Adani Gas while public shareholders of the utility will hold the remaining 25.2%.
Adani Gas said in a statement that the partnership involves developing regasification terminals including Dhamra LNG terminal on the east coast of India.
The company will also set up a pan-India gas distribution platform, build a network of 1,500 fuel retail stations and an equal number of compressed natural gas (CNG) stations for gas distribution over the next 10 years.
This partnership on gas in India represents a net acquisition cost of about $600 million over 2019-2020, taking into account the sale of Total’s interest in Hazira terminal in early 2019, the French company said in a statement.
Total, which is the world’s second-largest LNG player, sees substantial growth in India’s natural gas market, which is expected to see demand of 28 million tonnes by 2023, making the country the fourth biggest importer of the fossil fuel, according to Bloomberg.
Adani did not disclose the use of proceeds from this deal, which follows another large transaction in the oil and gas segment two months ago when billionaire Mukesh Ambani-led Reliance Industries Ltd announced plans to sell a 20% stake in its oil-to-chemicals business to Saudi Aramco for over Rs 1 trillion ($15 billion).
Ambani also said that Reliance has separately signed a pact with BP Plc to form a joint venture in the petroleum retailing business. He had said the proceeds would be used to pare debt.
Shares of Adani Enterprises on the BSE surged 7.38% on Monday to close at Rs 147 apiece.
Adani Gas shares surged 9.41% to close at Rs 150.60 apiece.
Adani-Total deal
The signing of agreements involves various gas assets across the supply chain. Two import and regasification LNG terminals -- Dhamra in east India and "potentially" Mundra in the west.
“Energy needs in India are immense and the Indian energy mix is key to the climate change challenge… Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors,” said Total’s chairman and CEO Patrick Pouyanné.
Adani Gas will also look to bolster its gas distribution network over the next decade through its 38 concessions to industrial, commercial and domestic customers, targeting six million homes as well as through 1,500 retail outlets of natural gas for vehicles, Total said.
Total will bring its LNG and retail expertise and will supply LNG to Adani Gas. Total and Adani will also establish a joint venture to market LNG in India and Bangladesh, the French major said.