Cairn-Vedanta deal comes closer to SEBI nod

Vedanta Resources' $9.6-billion (Rs43,200 crore) takeover of Cairn India seems to have come closer to getting approval from the Securities & Exchange Board of India for its open offer to Cairn shareholders, without which the deal cannot go through.

However, reports that SEBI has actually given its final approval to the deal are apparently misleading, as the market regulator has laid down conditions before it would do so. Specifically, it wants some of the clauses in the share purchase agreement.

On Friday evening, an unnamed Vedanta group official told The Times of India that SEBI had cleared its open offer for a 20-per cent stake in Cairn at Rs355 a share, and the company is in receipt of the letter. However, a SEBI official said Vedanta and its merchant banker had misinterpreted SEBI's observation, and it was not a permission.

Earlier in the week too, there was a false alarm about the SEBI clearance for the deal, but that was triggered by a technical error on the part of the regulator.

SEBI's clearance of Vedanta's open offer, if it comes, will be nearly seven months after the offer document was filed. The open offer, announced on 17 August last year, will be made at Rs355 per share.

The deal, however, is yet to get the government's approval on account of differences over who will bear the royalty burden on production from Cairn's Rajasthan block. At present, ONGC, a 30 per cent partner in the block, bears the burden. It wants this to be shared.