French energy giant Total to buy 37% stake in Adani Gas; shares jump 18% after announcement of acquisition

  • Total is the third foreign oil major to enter India's gas sector after BP Plc and Shell, and it comes at a time when India is spending heavily to cut its carbon emissions

  • Prime Minister Narendra Modi has set a target to more than double the share of gas in the country's energy basket to 15 percent by 2030

  • Total will buy up to 25.2 percent in Adani Gas from public shareholders at Rs 149.63 per share, representing an 8.7% premium to the stockt close

French energy giant Total SA will buy a 37.4 percent stake in Indian gas distribution company Adani Gas, as it looks to capitalise on the South Asian country’s push for cleaner sources of energy.

Total is the third foreign oil major to enter India’s gas sector after BP Plc and Shell, and it comes at a time when India is spending heavily to cut its carbon emissions.

Prime Minister Narendra Modi has set a target to more than double the share of gas in the country’s energy basket to 15 percent by 2030, while Total has embarked on a series of deals this year to expand its liquefied natural gas (LNG) portfolio.

Total will buy up to 25.2 percent in Adani Gas from public shareholders at Rs 149.63 per share, representing an 8.7% premium to the stock’s last close and valuing the stake at 41.47 billion rupees ($585 million).

It will also buy another 12.2 percent stake from the Adani family at an undisclosed price, according to stock exchange filings.

After the deal, the Adani family and Total will each hold 37.4 percent stake in Adani Gas, while public shareholders will own the remaining 25.2 percent.

 French energy giant Total to buy 37% stake in Adani Gas; shares jump 18% after announcement of acquisition

Representational image. AFP

“The natural gas market in India will have strong growth and is an attractive outlet for the world’s second-largest LNG player that Total has become,” Total Chairman and CEO Patrick Pouyanné said in a statement.

“Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors. This partnership with Adani is cornerstone to our development strategy in this country,” added Pouyanné.

Total and Adani plan to establish a joint venture to market LNG in India and Bangladesh.

Speaking later at a conference in New Delhi, Pouyanné said the deal will take 6 months to complete, adding that the energy major was looking to capture a substantial part of the Indian gas market with Adani.

Total was also in discussions with partners including Adani for partnership in renewable energy, he said at the India Energy Forum by CERAWeek.

Last month, Total completed the acquisition of Anadarko’s 26.5 percent stake in the Mozambique LNG project for $3.9 billion, while in June it took over Toshiba’s U.S. LNG business

Shares zoom over 18%

Shares of Adani Gas on Monday zoomed over 18 percent after French energy giant Total announced the acquisition of 37.4 percent stake in the Gautam Adani-led firm.

The scrip jumped 17.98 percent to Rs 162.40 on the BSE, PTI said.

At the NSE, it advanced 18.41 percent to Rs 163.

The gas marketing and distribution company, however, did not reveal the value of the deal.

The announcement comes a year after the two firms announced a 50:50 joint venture to import and retail natural gas.

"The partnership between Adani (50 percent) and Total (50 percent) includes several assets across the gas value chain notably two imports and regasification LNG terminals: Dhamra in East India and potentially Mundra in the west, as well as Adani Gas, one of the four main distributors of city gas in India of which Adani holds 74.8 percent and of which Total will acquire 37.4 percent," the French firm said in a statement on Monday.

--With agency inputs

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Updated Date: Oct 14, 2019 12:45:05 IST