Vedanta buys into Cairn’s Indian oil firm

Marion Dakers
MINING group Vedanta said it will take a majority stake in oil firm Cairn’s Indian operations yesterday, in a cash deal worth up to $9.6bn (£6.1bn).

The London-listed miner ended weeks of speculation and confirmed it would take control of the second largest oil firm in the country, Cairn India, by purchasing between 51 and 60 per cent of the company.

The deal represents a 21 per cent premium on Cairn’s Friday share price on the Mumbai stock exchange. Cairn chief executive Bill Gammell, who owns 0.5 per cent of the firm, is expected to net a significant windfall.

Vedanta, which is London-listed and Indian focused, will borrow as much as $6.5bn to fund the acquisition, said deputy chairman Navin Agarwal yesterday.

Standard Chartered is acting as lead financing bank, and is said to be providing up to $5bn towards the purchase, while Credit Suisse and Goldman Sachs are joint financing banks. The bank debt will have a tenure of at least two years, the mining company said.

Cairn India currently produces 125,000 barrels of oil a day, which Ventanta said could roughly double thanks to its 70 per cent stake in the Rajasthan oil development project.
If the deal wins approval from both sets of shareholders and the Indian Reserve Bank, Vedanta would be only the second diversified mining group in the world, after BHP Billiton.

Meanwhile, Vedanta came under fire yesterday with its controversial project to develop a bauxite mine on sacred tribal land in India in jeopardy after a government inquiry said that mining would destroy the way of life in the area. The government panel advised against the project.