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RIL and RPL boards approve merger
03
Mar '09
The Boards of Directors of Reliance Industries Limited (RIL) and Reliance Petroleum Limited (RPL) unanimously approved RPL's merger with RIL, subject to necessary approvals. The exchange ratio recommended by both boards is 1 (one) share of RIL for every 16 (sixteen) shares of RPL. RIL will issue 6.92 crore new shares, thereby increasing its equity capital to Rs 1,643 crore.

Commenting on the merger, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd said: “This merger follows Reliance Industries' philosophy of creating enduring value for all our stakeholders. It is a significant step in our goal to be among the largest global corporations.”

Merger Benefits and Synergies:
The merger will unlock significant operational and financial synergies that exist between RIL and RPL. It creates a platform for value-enhancing growth and reinforces RIL's position as an integrated global energy company.

The merger will enhance value for shareholders of both companies. The merger is EPS accretive for RIL. Through this merger, RIL consolidates a world-class, complex refinery with minimal residual project risk, while complementing RIL's product range. There will be further gains from reduced operating costs arising from synergies of a combined operation.

The merger is expected to reduce the earnings volatility for RPL shareholders and allows them to participate in the full energy value chain of RIL.

The merger will result in RIL:
• Operating two of the world's largest, most complex refineries
• Owning 1.24 million barrels per day (MBPD) of crude processing capacity, the largest refining capacity at any single location in the world
• Emerging as the world's 5th largest producer of Polypropylene

Merger Details:
• Under the terms of the proposed merger, RPL shareholders will receive 1 (one) share of RIL for every 16 (sixteen) RPL shares held by them.
• The appointed date of merger of RPL with RIL is 1st April 2008.
• RIL will cancel its holding in RPL.

Based on the recommended merger ratio, RIL will issue 6.92 crore new equity shares to the existing shareholders of RPL. This will result in a 4.4% increase in equity base from Rs 1,574 crore shares to Rs 1,643 crore. Consequently, the promoter holding in RIL will reduce from 49.0% to 47.0%.

Reliance Industries Limited


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