GSPC/GSPL/Gujarat Gas Merger & De-merger
I’d posted on this in detail elsewhere, thought i’d drop in the summary here as well:
Scheme Details
- GSPC group owned by Govt. of Gujarat is undertaking a 4-way merger, and a subsequent de-merger to simplify its corporate holding structure and to unlock value.
- GSPC group has a presence across entire value chain of Natural Gas ecosystem, with GSPC present upstream, GSPL midstream and GGL downstream.
- Unlisted GSPC (plus 100% WOS GEL) and Listed GSPL will merge into Listed GGL. Then, the Gas Transmission business of combined entity will be de-merged into a new company GSPL Transmission Limited (GTL). GTL will also subsequently be listed.
Existing Structure
Proposed Structure after Restructuring
Scheme Details are as under:
- Board Approval Date: 30th Aug 2024
- Amalgamation Appointed Date: 01st Apr 2024
- De-merger Appointed Date: 01st Apr 2025
- Effective Date: To be announced, as approvals are still pending.
- Current Status: Initial SEBI, Stock Exchange and MCA approvals have been received. Meetings of shareholders has been called in mid-october for approval of the scheme. Entire formalities, including issuance of new shares of GGL and listing of GTL, expected to be completed by Dec’25.
- Step 1: Amalgamation of GSPC with GGL: In this leg, GSPC merges with GGL, and for every 305 shares held by owners of GSPC, they are issued 10 shares of GGL
- Step 2: Amalgamation of GSPL with GGL: In this leg, GSPL merges with GGL + GSPC combined of last step. For every 13 shares held by owners of GSPL, they are issued 10 shares of GGL.
- Step 3: GEL merges with Combined GGL - no fresh shares to be issued
- Step 4: Gas Transmission business of combined GGL is de-merged into GTL. For every 3 shares held by owners of combined GGL, they are issued 1 share of GTL
A note on valuation
Now for the interesting bit. This deal has a favorable share-swap ratio, if you notice the pre-Scheme and post-Scheme Mcaps for minority shareholders.
Pre-Scheme Mcap for minority shareholders
Post-Scheme Mcap for minority shareholders, at current MCap
%age gain/loss in value for minority shareholders if Mcap remains constant
So, even if MCap of combined entity falls, GSPL minority shareholders are protected till a 19% drop, and GGL minority shareholders till a 15% drop in combined valuation (all calculations as on 30th Sep 25)
Also, in case you want to take a stab at valuing consol GSPC group separately, here are the key consolidated nos.
And lastly, a few disclaimers
- GSPC might have a negative MCap ascribed to it - This is possible if value of this unlisted co. is already being reflected in current MCaps of GGL and GSPL.
- Deal might be delayed/disapproved. Promoters can always change their mind, and also shareholder approvals + subsequent MCA approvals are still pending.
- Price of GGL and GSPL can correct in the interim - Has already happened in the past where prices have corrected by ~27% post deal announcement peak in Aug’24.
- The calculations presented here can be erroneous - Please always do your own research to rely on your own convictions! I can’t emphasize this enough.