ONGC and Imperial said in a joint statement Tuesday that their boards had reached agreement on the terms of a preconditional cash offer, which values Imperial shares at 1,250 pence ($22.95).
London-based Imperial, which revealed earlier this month that it had received potential takeover approaches from two different parties, said the ONGC offer "reflects a fair value."
Imperial, an independent upstream oil and gas exploration company with holdings mainly in western Siberia and Kazakhstan, has not named its other suitor, but media reports have suggested that it was state-owned Chinese oil refiner Sinopec.
Both China and India have encouraged their state-owned oil and gas giants to diversify and expand their access to scarce energy resources.
ONGC is India's largest oil and gas explorer, and Tuesday's deal could double its proved and probable reserves. ONGC buys hydrocarbon assets abroad through its overseas arm, ONGC Videsh, to meet a growing domestic demand. About 70 percent of India's fuel needs are currently imported.
"The acquisition represents an important addition to OVL's operations, and we believe that OVL's financial strength and technical expertise will further enhance the attractive growth potential of the business in the Tomsk region," said ONGC Videsh managing director R.S. Butola.
Imperial Energy chief Peter Levine said the offer matches Imperial's rapid growth in recent years from a pure exploration company. Levine should net about ?100 million from the sale.
The offer price represents a 62 percent premium to Imperial's share price close on July 11, the last day before the company revealed that it had received an approach. The stock was trading below the offer price midafternoon Tuesday, down 2 percent at 1,215 pence.
The takeover will require the approval of the Russian authorities. Several sources close to the parties said they expected the Indian government would have received a green light from the Kremlin before ONGC bid. "We know senior conversations have taken place," one source said.
Another source said the Russian government may prefer India to buy Imperial after a couple of Russian deals involving China in recent years.
However, one source close to the matter said he expected ONGC would be forced to sell on a majority stake in Imperial to a state-controlled company such as Rosneft or Gazprom. "I would be amazed if there was not some form of onward sale," the source said.
Such a move would follow a recent pattern of the state-backed giants winning majority stakes in big, formerly privatized energy assets. In 2006, Sinopec bought Udmurtneft, a 120,000 barrels per day crude production unit from TNK-BP for about $3.5 billion but later sold a 51 percent stake to Rosneft.
ONGC Videsh already has a presence in Russia through a 20 percent stake in ExxonMobil-led Sakhalin-1, which is currently locked in a dispute with the Kremlin.
AP, Reuters
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.