Gujarat Gas approves merger and demerger plan involving GSPC and GSPL

Merger and Acquisition: Gujarat Gas Limited has announced a critical restructuring of the company. On August 30, the board approved the scheme arrangement and amalgamation wherein GSPC, GSPC Energy Limited, and Gujarat State Petronet Limited would be merged with GGL. This whole scheme integrates the operation of GSPC, GSPL, and GEL under the umbrella of GGL.

Demerger of Gas Transmission Business

The scheme, therefore, also proposes the demerger of GGL's Gas Transmission Business. In this regard, the business shall be transferred and separately listed as GSPL Transmission Ltd. (GTL) on the Indian Stock Exchanges. The shareholding proposals for the existing shareholders in GSPL and GSPC are defined in the scheme for fair distribution of shares at the newly presented structures.

Increased Shareholder Value and Operational Efficiency

In the words of GGL through an exchange filing, the merger is proposed to achieve business synergies, reduce complexity in the GSPC Group holding structure, unlock shareholder value, and improve operational efficiency. This integration is likely to extend the scale of the business and smoothen resource utilization for the concerned entities.

While GSPC is a natural gas trading and exploration company, GSPL operates a natural gas transmission network. GGL, however, has to do with the city gas distribution, mainly responsible for the delivery of the gas to the end users.

Shareholding Arrangements and Stock Performance

Under the scheme, GGL will allot 10 equity shares of Rs 2 each for every 305 equity shares of Re 1 held in GSPC. Similarly, the GSPL shareholders will get 10 equity shares of Rs 2 each in GGL for every 13 equity shares of Rs 10 held in GSPL. GGL shareholders would also get 1 equity share of Rs 10 each in GSPL Transmission Limited (GTL) for every 3 equity shares of Rs 2 held in GGL. On the news, shares of GGL ended at Rs 605.50, gaining 0.36 percent while GSPL shares jumped by 5.50 percent to end at Rs 442.35. The recent move, however,. Gujarat Gas shares are down over 10 percent in the last month.

The deal is subject to regulatory approvals, which are necessary from the Ministry of Corporate Affairs, National Stock Exchange of India, BSE, SEBI, and also from shareholders and creditors.