Tags: AS | India | Cairn | Vedanta

Vedanta to Pay Up to $9.6 Billion for Cairn Stake

Monday, 16 Aug 2010 07:17 AM

Vedanta Resources PLC has agreed to pay $8.5 billion to $9.6 billion for a 51 percent to 60 percent stake in the India unit of Britain's Cairn Energy PLC, the companies said Monday.

The transaction is London-listed Vedanta's first foray into oil and gas and would give the mining giant access to India's fast-growing oil and gas sector. For Cairn, the deal frees up resources for further exploration in Greenland, another area of interest for the company.

"The proposed acquisition significantly enhances Vedanta's position as a natural resources champion in India," Vedanta executive chairman Anil Agarwal said in a statement.

The transaction must still be approved by Indian authorities and shareholders.

The price — 405 rupees a share ($8.70), which includes a 50 rupee per share noncompete fee — is a 32 percent premium to Cairn's average closing price over the last three months, the companies said.

Cairn India is the nation's fourth largest oil and gas company, with a market capitalization of $14 billion, and produces 125,000 barrels of oil a day from fields in the northern state of Rajasthan.

Vedanta said it believes it can more than double output from those fields, which contain an estimated 6.5 billion barrels of oil and gas equivalent.

India imports more than two thirds of its oil and imports are forecast to grow at 5.4 percent a year through 2015. If Vedanta is able to double production, as planned, it would become a major Indian oil player, accounting for a quarter of the nation's total oil output, by the company's own calculations.

If the deal goes as planned, Cairn Energy's stake in Cairn India would drop from 62.4 percent to between 10.6 percent and 21.6 percent. Vedanta Resources would hold 31 percent to 40 percent of Cairn India directly and its subsidiary Sesa Goa Ltd. would hold 20 percent.

Cairn India shares briefly spiked on the news before tumbling 5.6 percent, to 335.7 rupees, in an otherwise flat Bombay Stock Exchange.

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Vedanta Resources PLC has agreed to pay $8.5 billion to $9.6 billion for a 51 percent to 60 percent stake in the India unit of Britain's Cairn Energy PLC, the companies said Monday.The transaction is London-listed Vedanta's first foray into oil and gas and would give the...
AS,India,Cairn,Vedanta
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2010-17-16
Monday, 16 Aug 2010 07:17 AM
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