Vedanta buys Cairn India stake from Petronas

Vedanta’s unit, Sesa Goa, bought 200 million equity shares at Rs 331 a piece, sources said. Petronas sold its entire 14.9 per cent stake in Cairn India with domestic and foreign institutions buying the rest.

The share sale happened in block deals and the tender price was lower than Rs 355 a share that Vedanta is offering for buying 20 per cent stake in Cairn India through an open offer. Vedanta group in August last year had proposed to buy up to 51 per cent stake in Cairn India from Cairn Energy Plc for as much as $8.48 billion.

Subsequent to the deal to buy Cairn Energy at Rs 405 a share, Sesa Goa announced an open offer to buy an additional 20 per cent stake at Rs 355 a piece.

The Rs 405 a share price that Vedanta is paying to Cairn Energy, includes a Rs 50 per share non-compete fee, which is not being paid to minority shareholders.

Sesa Goa’s open offer opened on April 11 and will close at the end of the month.
Sources said Petronas was frustrated at growth being impaired at Cairn India and had decided to exit the company. It had invested $800 million to take a little less than 10 per cent stake in Cairn India when the company got listed in 2006. In subsequent two tranches, it raised the stake to 14.9 per cent but off late it had been frustrated as government delayed approvals to Cairn India to raise output. Vedanta is paying Rs 405 per share to Cairn Energy but only Rs 355 apiece to Cairn India’s minority shareholders. The price offered to Cairn Energy includes a Rs 50 per share non- compete fee to keep the Edinburgh-based firm out of India.

Petronas had in December 2006 invested about $800 million to buy a little less than 10 per cent stake in Cairn India when it was listed on the Bombay Stock Exchange through an initial public offering.

It bought an additional stake in a preferential allotment in March 2008 and a further 2.3 per cent stake in Cairn India in October 2009, taking its total to 14.9 per cent.

Billionaire Anil Agarwal-controlled Vedanta is following BHP Billiton’s footsteps to diversify from mining to oil and gas, through the acquisition of Cairn India.

Vedanta and Cairn Energy have extended the deadline to seal the deal to May 20, after they failed to get the approval from the Indian government within the previous deadline of April 15.