Vedanta to acquire up to 60pc stake in Cairn India for $9.6 bn

New Delhi, Aug 16 (PTI) London-listed mining firm Vedanta
Resources will acquire a majority stake of up to 60 per cent
in Cairn India, the owner of India's largest onland oilfield,
for USD 9.6 billion.
Edinburgh-based Cairn Energy Plc, which holds 62.37 per
cent stake in Cairn India, will sell a maximum of 51 per cent
of its stake to Vedanta Group for USD 8.48 billion, the two
companies said in separate statements.
Cairn Energy is selling the stake at Rs 405 per share, a
premium of about 32 per cent to the Cairn India average
closing price for 90 days prior to August 14.
The price includes a Rs 50 per share non-compete premium
for Cairn Energy Plc not to enter into oil and gas business in
India, Pakistan, Bhutan and Sri Lanka.
Vedanta will make an about USD 3 billion open offer to
Cairn India shareholders at Rs 355 per share for up to 20 per
cent additional stake.
If Vedanta is able to get offers for entire 20 per cent
then Cairn Energy will restrict sale of its share to 40 per
cent (at USD 6.651 billion) but will scale up its share sale
up to 51 per cent if the issue is not fully subscribed.
Vedanta Resources Plc will acquire 31 to 40 per cent
interest in Cairn India while the remaining 20 per cent would
be taken by group firm Sesa Group.
For the zinc, copper and iron ore mining firm Vedanta,
this will be maiden foray into the lucrative oil business by
getting hold of Cairn India's Mangala oilfields in Rajasthan
that are currently producing 125,000 barrels per day and have
potential to go up to 150,000 bpd.
Run by billionaire Anil Agarwal, 57, the group has
already sought to expand into power generation.
Vedanta follows mining major BHP Billiton in adding oil
assets. BHP had moved into oil and gas with its 2001
acquisition of Billiton Plc for USD 11.6 billion.
Vedanta's deal will be contingent on government approval,
as Cairn's three producing oil and gas assets, including the
giant Rajasthan fields and seven exploration blocks, either
have explicit provisions for seeking prior approval before
transfer of interest or gives pre-emption, or the right of
first refusal (ROFR), to partners like ONGC.
Cairn Energy Plc Chief Executive Bill Gammell said he was
hopeful of government support for the deal.
The Production Sharing Contract for the Rajasthan field
is silent on government approval for transfer of ownership,
but the Joint Operating Agreement between Cairn India and ONGC
gives the partners ROFR in case of stake sale.
The same is the case with gas discovery block CB-OS-2 and
the eastern offshore Ravva oil and gas fields. But its seven
exploration blocks, including the KG-DWN-98/2 block with ONGC,
have explicit provisions for government approval in case of a
change in control. PTI ANZ
KAB