Cairn Energy to sell 40 per cent stake in Indian arm to Vedanta

05 May 2011

UK-based Cairn Energy Plc today said it would sell a maximum of 40 per cent stake in its Indian unit to mining group Vedanta Resources for $ 6.8 billion.
 
In August last year, Cairn had announced the sale of 40 to 51 per cent stake in Cairn India to Vedanta. Today's announcement by the company follows the result of open offer Vedanta Group firm Sesa Goa Ltd made to minority shareholders.

"A total of approximately 155 million Cairn India shares, representing 8.1 per cent of the share capital, have been tendered" in the open offer that closed on 30 April, the company said in a press statement.

Sesa Goa had earlier acquired a 10.4 per cent stake in the oil explorer from Petronas International Corp of Malaysia. With the shares tendered in the open offer, Sesa Goa now holds an 18.5 per cent stake in Cairn India.

"Cairn and Vedanta have agreed that, for the purposes of the formula set out in the share purchase deed entered into in August 2010, these (Petronas) shares will all be treated as if they had been acquired in the open offer," Cairn said.
 
"Accordingly, on completion of the transaction, Cairn will sell a stake in Cairn India to Vedanta equivalent to 40 per cent of the share capital, following which Cairn will hold a residual interest of 21.7 per cent of the share capital," it added.

Cairn Energy is getting Rs405 per share from Vendanta, which includes a Rs50 per share non-compete fee to keep the Edinburgh-based firm out of India.

Besides $6.8 billion it is paying to Cairn Energy, Vedanta group acquired 8.1 per cent shares from minority shareholders for $1.24 billion and a 10.4 per cent stake from Petronas for $1.47 billion.

Sesa Goa offered Rs355 a share to the minority stockholders, after it paid Malaysia's Petronas Rs331 a share.