Vedanta close to Indian oil deal

Cairn Energy is poised to sell its Indian oil fields to Vedanta Resources for £5bn, in a deal that will net the explorer's shareholders a windfall of at least £1bn.

It is thought that the Edinburgh-based explorer, which has a 62 per cent stake in the Indian subsidiary, could unveil the sale of the 51 per cent shareholding to Vedanta as early as today.

The two groups were thought to be putting the final touches to a deal over the weekend.

The acquisition would catapult Vedanta, the world's biggest zinc producer, into the oil business, as part of its plans to become a fully blown resources group.

It is thought that Sir Bill Gammell, the chief executive of Cairn, would receive at least £2m for his 0.2 per cent stake, but it could be more, depending on the size of the deal. Cairn would use the proceeds from the share sale to fund its extensive drilling programme in Greenland.

Vedanta, the world's biggest zinc producer, is eager to develop into a leading resources group, and encourages the moniker "the Indian BHP Billiton", referring to the Anglo-Australian giant that has interests in numerous commodities.