* RNRL shareholders to get 1 Rel Power share for 4 held
* Share swap deal valued at about $1.5 bln
* Merger to accelerate Reliance Power's gas-based projects (Adds details, quotes, byline)
By Pratish Narayanan and Aniruddha Basu
MUMBAI, July 4 (Reuters) - Reliance Power (RPOL.BO) will absorb sister firm Reliance Natural Resources (RENR.BO) in a share swap deal valued at $1.5 billion, the latest in a series of deals by one or other of the billionaire Ambani brothers.
Reliance Natural Resources (RNRL) shareholders will receive one Reliance Power share for every four they hold, the firms, both controlled by the younger Ambani brother, Anil, said in a statement on Sunday.
The two brothers have been changing India's corporate scenery with acquisitions since resolving a long-running gas supply dispute between them last month.
Based on the closing price of Reliance Power shares on Friday and the number of outstanding shares of Reliance Natural, the deal is valued at about $1.5 billion, according to Reuters calculations.
"There was a general feeling ... that RNRL was a sort of shell company. Now with the merger ... it will cease to be a shell company and be part of Reliance Power," said Arun Kejriwal, director at research firm KRIS.
Reliance Natural lost a May ruling by India's highest court in a gas supply dispute with Reliance Industries (RELI.BO), controlled by Anil's elder brother, Mukesh Ambani, the world's fourth-richest man.
Reliance Industries operates the country's biggest gas find, in the D6 block of the Krishna Godavari basin off India's east coast. The government determines who gets the gas from the field and at what price.
Late last month, Reliance Natural and Reliance Industries said they signed a revised gas supply agreement, but did not disclose details. [ID:nSGE65O09O]
Reliance Natural had wanted Reliance Industries to honour a private deal between the brothers, struck when the Reliance empire was split, to supply it with 28 million standard cubic metres of gas for 17 years at $2.34, about half the government-set price.
India's Supreme Court ordered the companies to renegotiate the agreement at the government-approved price.
The gas is critical for Anil Ambani's power business, including projects being built by Reliance Power. Reliance Power went public in early 2008 in a $2.9 billion IPO -- India's biggest -- but has never risen above its issue price.
Shares in Reliance Power, valued at $8.75 billion, closed up 3.3 percent, while Reliance Natural shares, with a market capitalisation of $2.3 billion, ended down 1.9 percent on Friday amid market talk about a deal.
The merger will accelerate Reliance Power's plans for setting up as much as 10,000 megawatts of gas-based power plants, the company's statement said on Sunday.
The Ambani brothers split their late father Dhirubhai's business empire five years ago after disagreeing over ownership.
For a FACTBOX on the various holdings of the Ambani brothers, see [ID:nSGE64N1K6]
Following the Supreme Court verdict, the Ambani brothers took a step towards reconciliation, ending a pact that forbade them from competing with each other, opening up sectors such as power generation, telecoms and financials to the elder sibling. [ID:nSGE64M01P]
Both brothers have been active dealmakers in recent months.
Anil Ambani's Reliance Communications (RLCM.BO), India's No. 2 cellphone operator, agreed in late June to merge its telecoms towers business with that of GTL Infrastructure (GTLI.BO) and is also looking to sell a 26 percent stake in itself. [ID:nSGE65Q00S]
Mukesh Ambani's Reliance Industries, the country's biggest listed company, made a dramatic return to telecoms by buying the only company to win nationwide broadband wireless spectrum in a recent government auction.
The elder Ambani recently unveiled a push into India's power sector by saying his company would bid for so-called ultra-mega power projects, or those bigger than 4,000 MW.
Sources have said Mukesh Ambani is also pursuing deals in the financial and healthcare sectors. (Editing by Will Waterman)