Petronas offloads Cairn India stake to Vedanta

Apr 19, 2011 |

Correspondent

New Delhi

April 19: Mr Anil Agarwal’s Vedanta on Tuesday showed resolve to go ahead with its plan to acquire Cairn India despite regulatory hurdles by buying 10.4 per cent stake in the company in a block deal from Malaysia’s Petronas for around $1.5 billion. The acquisition of the 10.5 per cent stake implies that the Vedanta group can now seek a board seat in Cairn India. Petronas sold all of its 14.94 per cent holding in Cairn India for $2.1billion. The rest of the Petronas stake in Cairn India has been acquired by financial institutions.

Early this month, the Union Cabinet had referred the $9.6 billion deal in which the UK-based Cairn Energy Plc is selling stake in its Indian subsidiary to Vedanta Resources, to a group of ministers for a closer examination. The acquisition deal has been held up as it is awaiting government’s approval since August 2010 when Cairn Energy Plc decided to sell its stake in Cairn India to Vedanta.

Initially, Cairn’s sale of a 40 to 51 per cent stake in its Indian subsidiary and the open offer by Sesa Goa a subsidiary of Vedanta for acquisition of an additional 20 per cent stake were to be completed by April 15. However, due to regulatory hurdles Cairn Plc extended the deadline to May 20. Petronas shares were acquired by Vedanta’s subsidiary Sesa Goa at `331 per share. Sesa Goa said that acquisition of shares from Petronas is in addition to the open offer launched by it on April 11 and the open offer will continue. The acquisition of shares from Petronas means that Vedanta will get a controlling stake in Cairn India even if it fails to get a big response from shareholders to its open offer.

At the centre of this controversy is the royalty issue for the Rajasthan block, from which Cairn India derives most of its revenues. Cairn India holds 70 per cent stake in Barmer oil field and the rest is owned by ONGC. However, ONGC pays 100 per cent royalty on the entire crude oil produced from Rajasthan oil fields, although it has only 30 per cent stake. Now the government wants Vedanta to share royalty payments. However, Cairn doesn’t want to agree to such a condition as it could impact the valuation of the deal.

Post new comment

<form action="/comment/reply/68778" accept-charset="UTF-8" method="post" id="comment-form"> <div><div class="form-item" id="edit-name-wrapper"> <label for="edit-name">Your name: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="60" name="name" id="edit-name" size="30" value="Reader" class="form-text required" /> </div> <div class="form-item" id="edit-mail-wrapper"> <label for="edit-mail">E-Mail Address: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="64" name="mail" id="edit-mail" size="30" value="" class="form-text required" /> <div class="description">The content of this field is kept private and will not be shown publicly.</div> </div> <div class="form-item" id="edit-comment-wrapper"> <label for="edit-comment">Comment: <span class="form-required" title="This field is required.">*</span></label> <textarea cols="60" rows="15" name="comment" id="edit-comment" class="form-textarea resizable required"></textarea> </div> <fieldset class=" collapsible collapsed"><legend>Input format</legend><div class="form-item" id="edit-format-1-wrapper"> <label class="option" for="edit-format-1"><input type="radio" id="edit-format-1" name="format" value="1" class="form-radio" /> Filtered HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd></li><li>Lines and paragraphs break automatically.</li></ul></div> </div> <div class="form-item" id="edit-format-2-wrapper"> <label class="option" for="edit-format-2"><input type="radio" id="edit-format-2" name="format" value="2" checked="checked" class="form-radio" /> Full HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Lines and paragraphs break automatically.</li></ul></div> </div> </fieldset> <input type="hidden" name="form_build_id" id="form-baeb0ca8812d292dcd2e5384bf1c7efd" value="form-baeb0ca8812d292dcd2e5384bf1c7efd" /> <input type="hidden" name="form_id" id="edit-comment-form" value="comment_form" /> <fieldset class="captcha"><legend>CAPTCHA</legend><div class="description">This question is for testing whether you are a human visitor and to prevent automated spam submissions.</div><input type="hidden" name="captcha_sid" id="edit-captcha-sid" value="80594429" /> <input type="hidden" name="captcha_response" id="edit-captcha-response" value="NLPCaptcha" /> <div class="form-item"> <div id="nlpcaptcha_ajax_api_container"><script type="text/javascript"> var NLPOptions = {key:'c4823cf77a2526b0fba265e2af75c1b5'};</script><script type="text/javascript" src="http://call.nlpcaptcha.in/js/captcha.js" ></script></div> </div> </fieldset> <span class="btn-left"><span class="btn-right"><input type="submit" name="op" id="edit-submit" value="Save" class="form-submit" /></span></span> </div></form>