Hopes that Cairn Energy would be able to overcome the lengthy regulatory delays in its bid to sell a stake in Cairn India to Vedanta Resources have gained impetus.

Shares in the company rose over 2 per cent on Tuesday in London, following the announcement on Monday night that it would be splitting the deal into two transactions, and make other transactional changes, which will result in a 5.3 per cent cut in post-tax proceeds.

In London, the move was seen as a positive among investors, who had been concerned that that deal could fall through entirely. “5% less money than before is a modest negative from the perspective of UK investors who have taken the view that it's a price worth paying when you have a better chance of getting things wrapped up and completed,” said one analyst at a London bank who spoke on condition of anonymity.

The revised sales and purchase agreement between Cairn Energy and Vedanta is a step in the right direction, wrote Evolution Securities analyst Richard Griffith in a note to clients on Tuesday.

Edinburgh-based Cairn Energy will first sell Vedanta Resources a 10 per cent stake, while an additional 30 per cent stake will be sold once government approval is gained.

Cairn Energy will also scrap a non-compete fee, which will cut the price of Cairn India shares in both transactions — to $7.85 from $8.66. The sale of the first 10 per cent will be completed by July 11, giving Vedanta a 28.5 per cent stake in the India venture.

Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the Government of India in a positive and constructive manner, said Sir Bill Gammell, chief executive of Cairn Energy. Sir Bill will step down as chief executive of the group at the end of June, but will retain his position as chairman of Cairn India, with responsibility for the Vedanta transaction, as well as becoming chairman of the entire group.

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