Vedanta seals £5bn buyout of Cairn India

CAIRN ENERGY is this morning poised to announce the sale of a majority stake in its Indian venture to Vedanta Resources, the precious metals miner, for around £5bn.

Lawyers were last night scrambling to finalise the paperwork for Vedanta’s purchase of 51 per cent of Cairn India. Cairn is expected to retain an 11 per cent stake, with the rest held by the Indian government and Malaysia’s Petronas.

Cairn shareholders are in for a multi-billion pound windfall, most likely through a special dividend. The remainder of the transaction cash will be used to fund Cairn’s drilling project off the coast of Greenland.

The deal marks the first foray into energy for Vedanta’s billionaire controller Anil Agarwal. Vedanta specialises in aluminium, copper and zinc extraction but will now gain access to Cairn’s lucrative oil and gas fields in Rajasthan.

Shares in the companies, both FTSE 100 constituents, moved in opposite directions on Friday as Cairn investors hoped for a payout and Vedanta holders fretted about its balance sheet. Cairn stock rose 3.4 per cent to 468.3p while Vedanta stock fell 5.9 per cent to £20.53.

However, India’s authorities will scrutinise the proposal closely. The government owns a stake through state-controlled Oil and Natural Gas Corp and is irked at Vedanta’s lack of direct experience in the sector, according to local media reports.