Synopsis: After rumors of a prospective deal between Reliance and Aramco after more than two years of negotiations, Reliance Industries’ stock rose as much as 2.6%.
According to persons familiar with the situation, Saudi Aramco is in advanced talks to buy a share in Reliance Industries Ltd.’s oil refining and chemicals sector in an all-stock deal.
The Saudi Arabian corporation is in talks to buy a roughly 20% stake in the Reliance Industries unit for $20 billion to $25 billion in Aramco shares, according to the people, who asked not to be identified because the information is confidential.
They also stated that Reliance Industries, which is funded by Indian billionaire Mukesh Ambani, might negotiate an agreement with Aramco in the coming weeks.
Following the Bloomberg News article, shares in Reliance Industries extended their advances to as much as 2.6 percent in Mumbai. A pact would bring the world’s largest oil exporter and one of the world’s fastest-growing energy consumers closer together.
It would bring an end to more than two years of talks and be Aramco’s first all-stock deal since its IPO in 2019. In the same year, Ambani revealed conversations for a deal with an indicated stake value of $15 billion.
The beginning of the coronavirus epidemic and a drop in oil prices caused the discussions to be postponed. Crude prices have risen by roughly 35% this year to nearly $70 a barrel, indicating that the energy markets have rebounded.
Last week, Aramco announced that due diligence on a deal with Reliance Industries was in the works.
An agreement would increase Aramco’s crude sales to India. It would enable Reliance Industries to secure a consistent supply of oil for its massive refineries and make Reliance Industries a shareholder in Aramco.
A purchase would give Reliance Industries a 1% share in Aramco, based on the company’s market value of $1.9 trillion. Details of the proposed sale are still being worked out, and the talks might drag on or fall apart, according to the sources. Aramco’s spokesperson declined to comment on the deal.
An email to the Saudi government’s Center for International Communication was not immediately returned.
Reliance Industries spokesperson said the business had nothing to add to Ambani’s remarks during the shareholders’ meeting in June when the conglomerate named Aramco Chairman Yasir Al-Rumayyan to the board of directors.
Ambani had stated that Reliance Industries might close an investment arrangement with the oil company this year. The Saudi government raised about $30 billion by selling 2% of Aramco in the initial public offering. It remains the largest first public offering (IPO) ever.
The de facto ruler, Crown Prince Mohammed bin Salman, stated in April that the kingdom was in talks to sell a 1% stake in Aramco to a “leading global energy business.” He didn’t say which one it was.
“This deal could be very important in strengthening Aramco’s sales in the country where this company resides,” the Prince had said. In July, Saudi Arabia sent 613,000 barrels of crude per day to India, accounting for around 10% of the country’s total exports.
The deal would assist Aramco in meeting its objective of more than doubling refining capacity to between 8 and 10 million barrels of crude per day. At the end of last year, the Saudi corporation had 3.6 million barrels per day of capacity, including joint venture shares. —Bloomberg.
