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Market regulator SEBI has cleared the acquisition of Cairn India by NRI billionaire, Mr Anil Agarwal led Vedanta Resources, removing a major hurdle for the $9.6 billion dollar deal announced about seven months ago.
The deal was announced in August 2010 and has since then been awaiting approvals from SEBI and the government.
The government is yet to approve the deal, wherein the British energy giant Cairn Energy agreed to sell its majority stake in Cairn India to Vedanta group.
After seeking numerous clarifications on the deal from acquirer over the past seven months, the SEBI has issued its final observations on the mandatory open offer to be made to the public shareholders as part of the deal.
Any deal involving acquisition of 15 per cent or more stake in a listed company, requires the acquirer to make an open offer for 20 per cent stake purchase from public shareholders and this offer needs to be approved by SEBI.
Soon after announcing the deal to acquire up to 51 per cent stake in Cairn India, Vedanta group had sought SEBI’s approval for the mandatory open offer to be made to the public shareholders of the target company.
In the public offer announced on August 17, Vedanta group had offered to acquire up to 20 per cent stake from public shareholders for a price of Rs 355 per share.
The Rs 13,631 crore open offer was first scheduled to open on October 11 and close on October 30, but got affected due to delay in SEBI approval for the same.
The company will now have to announce a fresh schedule for the open offer, where it may have to incorporate various clarifications sought by SEBI during the course of its due diligence on the proposed transaction.
Cairn India shares today closed 1.5 per cent higher at Rs 346.20 at the BSE.
The deal is currently awaiting an approval from the Cabinet Committee on Economic Affairs (CCEA).
The oil ministry last month circulated a draft note for the CCEA approval, but comments on the same have not been received from all the ministries.
The oil ministry will move Cabinet Committee on Economic Affairs (CCEA) once comments from the ministries of finance, law, home, environment and corporate affairs are received.
In all probability, the CCEA is likely to give an in-principle nod to the deal where the London based mining group Vedanta, which has no prior experience in oil sector, is buying up to 51 per cent stake of UK’s Cairn Energy Plc.
The oil ministry has watered down its preconditions and has almost withdrawn its condition that Rs 21,802 crore in royalty and cess paid by ONGC on behalf of Cairn India from the Rajasthan oilfields should be equitably shared.
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