* Valero shares down nearly 7 pct
* Reliance wants to "dispel the rumors"
* Shell not a likely buyer -analyst
* Valero due to report Q3 earnings Tuesday
By Anna Driver
Oct 31 India's Reliance Industries
said it has no plans to buy Valero Energy , news that
sent the U.S. refining company's shares down nearly 7 percent.
Companies typically do not comment on market speculation,
but Reliance said it was taking the step because of the
materiality of the rumored deal.
"Reliance wishes to dispel the rumors and announce that it
is not in discussions with Valero nor otherwise considering an
acquisition of Valero," Reliance, owner of the world's largest
refining complex, said in a statement on Monday.
Reliance said it would not comment further.
Last week, Valero's shares climbed 13 percent in a rally
fueled by a report in The Daily Mail that the refiner was being
sought after by both Reliance and Royal Dutch Shell .
A number of large oil companies including BP Plc
and ConocoPhillips are scaling back exposure to the
refining sector. As a result, there are a number of plants on
the market in the United States, where Valero is the largest
"The reality is, the current environment for mergers and
acquisitions has been really limited," Ann Kohler, an analyst
at CRT Capital Group, said.
Shell, which already owns or has an interest in six
refineries in the United States, may also run into regulatory
problems with a bid for Valero, Kohler said.
The Northeast market, where there are three refineries for
sale, is especially tough. The plants process more expensive
Brent crude oil and would require hefty investment to be able
to process cheaper oil.
A spokesman for Valero, which is due to report
third-quarter earnings on Tuesday, declined to comment on
Reliance's statement. A representative for Shell also declined
Shares of San Antonio-based Valero were down 6.7 percent at
$24.90 on Monday afternoon on the New York Stock Exchange, off
an earlier low at $24.38. The stock posted its largest one-day
decline in about two months.