Reliance Industries Merger Creates India’s Largest Integrated Oil Company

Reliance Industries has approved a merger with Reliance Petroleum to create the country's first fully integrated oil and petrochemicals major. A Reliance statement said the board of directors of both companies had unanimously approved the merger, subject to necessary regulatory approvals. It said the boards recommended giving investors one share of Reliance Industries for every 11 shares of Reliance Petroleum Ltd they hold.

The merger will bring under one umbrella India's largest petrochemicals maker Reliance Industries, which also has sizeable interests in oil and gas exploration, power and telecommunications, and the country's largest private-sector refiner, Reliance Petroleum.

The merged company will have annual sales of $11.8 billion and operating profits $1.8bn and a combined market capitalization of $10.06bn, making it the second biggest company in India behind Unilever's Indian subsidiary Hindustan Lever. The two companies said that the merged entity will enjoy scale, size and enhanced financial strength and that it would pursue domestic and selective international investment opportunities for future growth.

The founders of Reliance, the Ambani family, will retain 34% of the merged entity. Reliance Industries managing director Anil D Ambani said: "We are delighted to have the opportunity to merge two extremely strong and unique portfolios of assets to create an enterprise of truly global scale, with enhanced financial strength and resources, which will enable us to pursue future growth opportunities both domestically and internationally. It is also a recognition of the ongoing economic reforms in the country."