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Vedanta now eyes 51.5% stake from Cairn Plc

Suresh P. Iyengar Mumbai | Updated on May 04, 2011

505bl_Cairn.eps

Following tepid response to Sesa Goa's open offer





Cairn Energy Plc will offload 51.5 per cent stake to Vedanta Resources following the lukewarm response for the open offer made by the Vedanta Group company Sesa Goa, which was acting in concert in the proposed Rs 42,700-crore deal.

According to the deal announced in August last year, Vedanta was supposed to acquire a maximum stake of 60 per cent stake in Cairn India including the compulsory open offer for 20 per cent stake to be made by Sesa Goa.

On Wednesday, Sesa Goa announced that it has received 155 million shares representing about 8.1 per cent of the share capital of Cairn India. The company will pay about Rs 5,504 crore by May 15 based on the offer price of Rs 355 a share. Sesa Goa has reserve of Rs 4,100 crore as of March 31. Earlier, Sesa acquired 10.4 per cent stake of Cain India at Rs 331 a share in a bulk deal valued at about Rs 6,600 crore from Petronas International Corporation.

“Sesa Goa will hold the shares acquired in Cairn India irrespective of the deal getting approval from the Government. The tepid response for the open offer reflects the investor's confidence in the Vedanta Group. We are sure that the Government will give its nod for the deal,” said a source close to the deal .

The empowered group of minister (EGoM) headed by the Union Finance Minister Mr Pranab Mukherjee on Monday deferred its meeting on the deal without assigning any reason or a new date for the meeting. Other members of EGoM are Petroleum Minister Mr Jaipal Reddy, Telecommunications Minister Mr Kapil Sibal, Law Minister Mr Veerappa Moily and Planning Commission Deputy Chairman Mr Montek Singh Ahluwalia.

London Stock Exchange-listed Vedanta Resources in August last year had offered to buy up to 61 per cent stake in Cairn India from Edinburgh-based Cairn Energy Plc, but the process has been delayed due to various reasons including the contentious issue on the royalty paid to the Rajasthan Government. The Cabinet Committee on Economic Affairs, which was supposed to clear the deal, referred it to the EGoM last month.

The issues being tackled by the government include the royalty being borne by ONGC, the partner with Cairn India, for the pre-NELP Rajasthan oil fields and the dispute on cess being paid under protest by Cairn for the fields.

Sesa Goa shares on BSE were down two per cent at Rs 301 while Cairn India gained 0.35 per cent to Rs 354 on Wednesday.

Published on May 04, 2011

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