Proportion of shares versus cash yet to be decided by the parties

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Reliance Industries signed an LOI in 2019 to sell a 20% stake in its O2C business to Saudi Aramco. (Credit: aymane jdidi from Pixabay)

Reliance Industries and Saudi Aramco have reportedly revived their talks related to the sale of a 20% stake in the former’s oil-to-chemicals (O2C) business.

The parties have held discussions on a cash cum stock deal in the recent weeks, reported Financial Times, citing sources familiar with the matter.

Saudi Aramco is considering to pay for the stake initially through its shares followed by staggered cash payments spread over several years.

According to the company, the proportion of shares versus cash has not been decided by the parties and the terms of the deal as well are yet to be finalised.

In August 2019, Reliance Industries had signed a non-binding Letter of Intent (LOI) with the Saudi national oil company for the sale of the stake for $15bn. The business involved in the potential transaction was at that time valued by the Indian conglomerate at $75bn.

The deal was then estimated to be closed by March 2020 had it secured regulatory and other customary approvals.

However, in July 2020, it was reported that the proposed deal was hit by a delay resulting from the uncertainty caused by the Covid-19 pandemic and also the unforeseen circumstances in the energy market.

Earlier this year, Reliance Industries said that it had commenced the process of carving out its oil-to-chemicals unit into a separate subsidiary.

The O2C unit will be the holding company for undertaking the Indian conglomerate’s refining and marketing, and petrochemicals operations.

Reliance Industries is reorganising the O2C business to facilitate the participation of strategic investors and marquee sector focused investors.

The conglomerate will retain a majority stake in the new subsidiary, which will own the Jamnagar refinery in Gujarat, India.

Earlier this week, Saudi Arabia’s Crown Prince Mohammed Bin Salman disclosed that his government is in talks to sell a stake in Saudi Aramco to a global energy company in a deal that could be potentially worth $19bn.