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* Will launch tender offer for 25.2% of Adani Gas
* Total to also buy 12.2% stake from Adani family
* India spending heavily to cut carbon emissions
* Adani Gas shares surge more than 12% on news of deal
(Adds Wood Mackenzie comments, deal details)
By Chris Thomas and Nidhi Verma
BENGALURU/NEW DELHI, Oct 14 (Reuters) - French energy giant
Total SA said on Monday it will buy a 37.4% stake in
Indian gas distribution company Adani Gas, as it looks
to capitalise on India's push for cleaner sources of energy.
Total will pay about $866 million for the stake in Adani
Gas, which will ramp up its presence in a market that is
expected to become the second biggest driver of global demand
for liquefied natural gas (LNG) market, after China.
The French company is the third foreign oil major to enter
India's gas sector after BP Plc and Shell. They
have come at a time when India is spending heavily to cut its
carbon emissions.
Prime Minister Narendra Modi has set a target to more than
double the share of gas in India's energy basket to 15% by 2030,
while Total has embarked on a series of deals this year to
expand its liquefied natural gas (LNG) portfolio.
"Total's investment in Adani is undoubtedly a show of faith
in India's gas demand growth," said Nicholas Browne, research
director at energy consultancy Wood Mackenzie.
The consultancy firm projects India's gas demand will
double to 75 billion cubic metres by 2030.
It expects LNG to account for half of this demand, or just
under 30 million tonnes a year of LNG, equivalent to 10% of
today's global LNG market.
Total will initially buy up to 25.2% in Adani Gas from
public shareholders at 149.63 rupees per share, representing an
8.7% premium to the stock's last close and valuing the stake at
41.47 billion rupees ($585 million). Total will also buy a 12.2%
stake from the Adani family, according to a regulatory filing.
After the deal, the Adani family and Total will each hold
37.4% stake in Adani Gas, while public shareholders will own the
remaining 25.2%.
Shares of Adani Gas soared 18.4% on Monday morning after the
deal was announced. After paring some gains, the shares were up
more than 12% in late trading, valuing the entity at about $2.38
billion.
"For Adani, this is likely to be more about de-risking an
investment in expansion while also bringing in a global leader
in gas and LNG (to) support this," Browne said.
Acquiring a stake in Adani Gas also gives Total potential
access to two import and regasification LNG terminals in India.
Speaking later at a conference in New Delhi, Total Chairman
and CEO Patrick Pouyanné said the energy major was looking to
capture a substantial part of the Indian gas market with Adani
and that the deal would take 6 months to complete.
Total was also in discussions with partners including Adani
for partnership in renewable energy, he said at the India Energy
Forum by CERAWeek.
"The natural gas market in India will have strong growth and
is an attractive outlet for the world's second-largest LNG
player that Total has become," Pouyanné said in a separate
statement.
Total and Adani plan to establish a joint venture to market
LNG in India and Bangladesh, the companies said.
The deal marks another expansion by Total in the LNG sector,
after its swift purchase of Anadarko's Mozambique project - one
of the world's largest LNG developments - earlier this year, and
last month's decision to invest in the massive Arctic LNG 2
project in northern Russia.
Total completed the acquisition of Anadarko's 26.5%
stake in the Mozambique LNG project for $3.9 billion last month,
while in June it took over Toshiba's U.S. LNG business
($1 = 70.9130 Indian rupees)
(Reporting by Chris Thomas in Bengaluru and Nidhi Verma in New
Delhi; Additional reporting by Promit Mukherjee in New Delhi,
Sudip Kar-Gupta in Paris and Sabina Zawadzki in London; Editing
by Subhranshu Sahu and Richard Pullin & Simon Cameron-Moore)
