Vedanta buys Cairn Energy unit
By Erika Kinetz |
August 17, 2010, Tuesday
|
Print Edition
Print Edition
VEDANTA Resources Plc has agreed to pay US$8.5 billion to US$9.6 billion for a 51 percent to 60 percent stake in the India unit of Britain's Cairn Energy Plc, the companies said yesterday.
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 (US$8.70) a share, 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.
Cairn India is the nation's fourth-largest oil and gas company, with a market capitalization of US$14 billion.
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.
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 (US$8.70) a share, 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.
Cairn India is the nation's fourth-largest oil and gas company, with a market capitalization of US$14 billion.
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.
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