Indian oil firms step back from move to buy into Cairn

 
City A.M. Reporter
State-run Oil and Natural Gas Corp, GAIL India and Oil India will not make a counterbid against Vedanta Resources’ $9.6bn (£6.2bn) stake purchase in Cairn India, a senior official in India’s oil ministry said yesterday.

The decision makes it likely that Cairn Energy’s planned sale of up to a 51 per cent stake in its Indian division will proceed, analysts said, and boosted the Edinburgh-based company’s shares.

“There is no chance for a counterbid by Indian firms as the valuation done by Vedanta for Cairn India is already very high,” the oil ministry official said.

He declined to be named as he was not authorised to speak publicly.

Previously, an oil ministry source had said all options were open for Indian state-run firms on Cairn India and domestic media reported the firms had held informal talks on a joint bid.

ONGC, Oil India and GAIL declined to comment yesterday.

Last week, India-focused miner Vedanta said it agreed to spend up to $9.6bn to buy a majority stake in Cairn India from parent company Cairn Energy.

“I think it is very likely to go through,” said Will Armstein, oil analyst at brokerage Finncap, adding that since it was a corporate transaction rather than the sale of an individual field, the government had few mechanisms available to block the deal even if it sought to.

Shares in Cairn closed up 0.9 per cent at 449p yesterday.