Gujarat Gas surges over 13% to hit 52-week high after GSPC, GSPL merger news; check complete details

Gujarat Gas Ltd shares surged more than 10% to hit a 52-week high of ₹689.9 apiece on the NSE after the company announced that its board of directors approved the merger and demerger plan of Gujarat State Petroleum Corporation (GSPC) Group companies.

Gujarat State Petronet Ltd (GSPL) shares also rallied more than 4% in the morning trade to hit an intraday high ₹468 apiece on the NSE.

In a filing to the stock exchanges on Friday, August 30, Gujarat Gas informed the exchanges that the boards of Gujarat State Petroleum Corporation Limited (GSPC), Gujarat State Petronet Limited (GSPL), and Gujarat Gas Limited (GGL) have approved a restructuring scheme among entities of the GSPC Group.

Gujarat State Petroleum Corporation (GSPC) Group has announced a scheme of arrangement and simplification of its corporate structure through the merger and demerger of its entities. The demerger scheme is aimed at simplifying the holding structure and unlocking value for the shareholders. Additionally, the merger of GSPC with Gujarat Gas is aimed at amplifying the scale of operations and improving efficiency.

The merger also seeks to eliminate related party transactions, which are likely to improve EBITDA(Earnings Before Interest Taxes Depreciation and Amortisation) and Return on Capital Employed (RoCE), according to the filing.

The company also projects that the merger will increase the market share of the gas trading business while enabling focused growth strategies in other sectors.

As part of GSPC’s merger with GGL, 10 fully paid equity shares of Gujarat Gas of ₹2 each will be issued for every 305 fully paid equity shares of ₹1 each held by the GSPC shareholders.

GSPL will also be merged with Gujarat Gas, and ten fully paid equity shares of GGL of ₹2 each will be issued for every 13 fully paid equity shares of ₹10 each held by the shareholders in GSPL. As a part of the scheme, GSPC Energy Ltd (GEL) will also be merged with GGL.

The company will also undertake the demerger of GGL's gas transmission business and transfer it to a separate entity called GSPL Transmission Limited (GTL). As a part of this demerger, one fully paid equity share of ₹10 each of GTL will be issued for every three fully paid equity shares of ₹2 each held by shareholders of GGL. Shares of the resulting company GTL will list on the exchanges separately.

The company informed the bourses that the objective of the demerger is to ensure adherence to regulatory compliance and enable value unlocking for GSPL shareholders.

Shares of Gujarat Gas Ltd were trading at ₹662.15 apiece on the NSE, up by 9.09% at 9:22 am, while Gujarat State Petronet stock was trading at ₹425 apiece, down by 3.98%, on the NSE.