India finally clears Vedanta takeover of Cairn assets
Fifteen months after striking a deal to sell a controlling stake in its Indian unit, Britain's Cairn Energy has received regulatory clearance and can complete the $6.5bn (£4.1bn) transaction.
The oil firm, which has had a string of disappointments exploring for oil off the coast of Greenland, will sell a 30 per cent stake in Cairn India to Vedanta Resources, the mining and energy company focusing mainly on India.
Vedanta had already amassed about 29 per cent of Cairn India's shares, which will rise to 59 per cent when the deal is completed. Cairn Energy will see its holding in the Indian oil and gas unit fall from 52 per cent to 22 per cent.
The regulatory hold-up stemmed from a disagreement over the level of royalty payments made by Cairn to the Indian government, which has now been resolved.
Nearly 90 per cent of Cairn India's output comes from the state of Rajasthan and a controlling stake in the operation will significantly expand Vedanta's presence in the subcontinent. The sale will give Cairn Energy much-needed cash to keep exploring Greenland, where it has spent about $1bn on drilling in the past four years but has yet to find commercial quantities of oil.
Last week, the FTSE 100 company said its latest two wells have come up dry, taking its tally of unsuccessful attempts to eight. The group is now looking for a partner to help to share the cost of future exploration in the region.
However, Cairn Energy continued to put a brave face on its Arctic adventure last week, with its chief executive, Simon Thomson, saying that the company remained "encouraged that all of the ingredients for success are in evidence", having found "oil and gas shows", even though it has yet to make a commercial discovery.
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