Cairn India soars 4% after ONGC approves Cairn-Vedanta deal

ONGC yesterday gave its consent to Vedanta Resources for taking over Cairn India, but only if the mining group and the subsidiary of UK's Cairn Energy signed a legal pact on sharing the royalty and cess burden in their producing acreages.

Reacting to the news, shares of the company opened on a bullish note on the Bombay Stock Exchange and then surged by 3.71 per cent to a high of Rs 290.40.

A similar upsurge was witnessed in Cairn India's counter on the National Stock Exchange, where the company jumped by 3.47 per cent to a high of Rs 290.40 after opening at Rs 288.80.

The stock, however, saw some of the initial gains pared and was later trading at Rs 285.40 on the BSE, up 1.93 per cent, and at Rs 284.95 on the NSE, up 1.68 per cent, at 1020 hours.

The bullishness in the counter was in contrast to the cautious sentiment in the broader market, with the 30-share Sensex index quoted at 16,510.82 points, down 13.21 points, at 1020 hours.

"After detailed deliberations on preemptive rights and economic evaluation... the board of ONGC resolved that Cairn's request (for consent to the USD 9 billion transaction) may be agreed to, subject to Cairn, Vedanta and their affiliates executing a formal agreement with ONGC agreeing to the royalty and cess conditions," ONGC said in a statement after market hours yesterday.

ONGC agreed to waive its preemption rights over the deal and will issue a no-objection certificate (NOC) when Cairn and Vedanta sign legal documents on royalty and cess, an ONGC official said yesterday.