Vedanta close to $8bn deal to take control of Cairn India

Vedanta Resources is set to spend around $8bn-$8.5bn on a deal to buy a controlling stake in Cairn India, which operates the largest producing oilfield in the country's private sector.

The Indian miner, which has induced the ire of environmental and human rights groups over its plans to extract bauxite in the country's eastern Orissa state, is in advanced talks with Edinburgh-based Cairn Energy, which owns a controlling interest in Cairn India. Though pricing and the precise size of the stake are still being worked out, Cairn India was worth close to $13.8bn at the close in Mumbai on Thursday, leaving Cairn Energy's entire 62.4 per cent stake valued at around $8.6bn.

As The Independent revealed yesterday, Vedanta will pick up at least 51 per cent of the Indian business, leaving Cairn Energy with a minority interest in the country's fourth largest oil and gas company. No other bidders are believed to be involved and the transaction is expected to be made public early next week.

The two FTSE 100-listed companies confirmed talks on a potential sale on Thursday, but declined any further comment on the details last night.

Vedanta, which is expected to fund the acquisition with a combination of cash and debt, will need approval from the Indian government. The country's Petroleum Secretary, S Sundareshan, said companies that had signed a production sharing contract (PSC) with the Government for an oil exploration block would need approval in the event of the sale of a stake or of the company. "All PSCs have provisions for appropriate government approvals before such changes in ownership are made," he said.

Rahul Dhir, the former Merrill Lynch banker who was hired as Cairn India's chief executive in 2006, confirmed that Cairn Energy planned to maintain an interest, saying: "I don't think they are exiting the business – they are just selling [a] stake."

In London, Collins Stewart analysts said the deal could remove worries about the funding of Cairn Energy's exploration programme in offshore Greenland. Evolution Securities also raised the prospect of a special dividend for shareholders, a common practice among oil prospectors.

It said retaining an interest in the Indian company, whose main asset is located in the state of Rajasthan, will "enable Cairn to benefit" from positive developments at the business.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
i100
Travel
Suite dreams: the JW Marriott in Venice
travelChic new hotels in 2015
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect