Vedanta likely to accept royalty conditions on Cairn deal: sources

Vedanta Resources Plc may accept the Indian government's conditions for the approval of its planned $9.4 billion bid for control of Cairn India Ltd as high crude oil prices make the deal attractive, according to analysts.

Vedanta acquired an 18.5 per cent stake in CAIR in April and is awaiting cabinet approval to buy a further 40 per cent from UK-based Cairn Energy Plc.

Vedanta's bid, announced in August, and valued Cairn's India assets at a total $9.4 billion. As part of the deal, Vedanta arm Sesa Goa Ltd had bought 8.1 per cent from minority shareholders last month, paying Rs355 rupees a share.

The company separately acquired a 10.4 per cent stake from Malaysia's Petroliam Nasional Bhd and would buy another 40 per cent from Cairn Energy.

A ministerial group led by finance minister Pranab Mukherjee met on 27 May and recommended conditional approval of the deal, including reducing state-owned Oil & Natural Gas Corp's royalty burden for Cairn India's main asset, according to two people in the know of the matter.

The panel's advice would be sent to the cabinet within two weeks, oil minister S Jaipal Reddy said following the meeting. He did not give any additional information.