ONGC to Bid $1.9Bln For Imperial

India's state-run Oil and Natural Gas Corp. reluctantly went ahead with its high-priced bid for Russia-focused oil company Imperial Energy on Tuesday after losing its appeal to delay the process.

Shares in Imperial closed up 18 percent at 1,005 pence, although they are still below ONGC's bid price of 1,250 pence a share.

The deal now hinges on whether ONGC's condition that it must receive 90 percent acceptances is fulfilled during the offer period.

Imperial said Tuesday that it strongly recommended that shareholders accept the offer "as soon as possible" as ONGC was not obliged to extend its offer.

Imperial investors believe that if the 90 percent condition is not met, ONGC will walk away from the deal.

"Given how ONGC has behaved on this so far, I think that if they don't get 90 percent they are going to walk," a source close to the deal said.

ONGC Videsh, ONGC's overseas arm, agreed to buy Imperial in August, when oil traded at $128 a barrel, and the subsequent collapse in crude prices has prompted speculation that the company wants to renegotiate or abandon its bid.

"We are entirely aware of our obligation to Imperial shareholders and to the capital markets," said a London-based spokesman for ONGC Videsh.

One small investor in Imperial who declined to be named said they believed that ONGC "wanted to renegotiate."

ONGC had until midnight on Tuesday to post its offer to shareholders by British takeover law rules.

Earlier, the company was denied an extension by British regulator The Takeover Panel.

ONGC shares in Mumbai closed up 0.7 percent.

Earlier on Tuesday, the Press Trust of India news agency said a federal cabinet panel meeting chaired by Prime Minister Manmohan Singh allowed ONGC to go ahead with the takeover.

ONGC had to get approval from the government following a slump in oil prices to less than $45 a barrel, an ONGC source said.