Vedanta takes further 10-% stake in Cairn India
13 Jul 2011
London-listed Vedanta Resources PLC today completed the purchase of another 10 per cent stake in oil company Cairn Energy's Indian arm, Cairn India Ltd, while working towards securing a majority control of the company.
According to Cairn Energy PLC, the net proceeds from the sale amounted to $1.362 billion, though it did not provide further financial details about the deal.
With the transaction, Vedanta's stake in the India-focused company rises to 28.5 per cent. The transaction comes as part of a string of deals in the Indian oil and gas sector.
With the newly acquired stake, Vedanta holds 191.9 million shares of Cairn India.
Cairn Energy remains the majority shareholder in Cairn India with a 52.2 per cent stake. Vedanta is attempting to necessary approvals from the Indian government to buy another 30 per cent of Cairn India.
Though Vedanta had announced plans to take majority control of Cairn India from Cairn Energy last year, the Indian government had held back its approval as it wanted Cairn to settle long-pending issues of royalty payment with state-run Oil & Natural Gas Corp a tax arbitration case with the government.
Earlier this year, BP PLC also announced it was acquiring a 30-per cent stake in 23 oil and gas blocks operated by Reliance Industries the KG basin for about $7 billion.
The Cairn - Vedanta deal is said to be part of Cairn Energy's plans to refocus its efforts on exploration in Greenland. Likewise it was as also part of the Vedanta Group's plans to become the second diversified miner to move into the oil and gas space after BHP Billiton.