Acquisition of Cairn India by Vedanta - Biggest Deal in Indian Oil Sector
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Code : FCF0017
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Region : Netherlands, Europe
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Introduction:Cairn Energy, an unknown British oil company till 2003, got a golden opportunity to mint money, as Royal Dutch Shell, a British oil company probably made an injudicious decision to exit from the oil blocks in Rajasthan (India). Cairn Energy bought the oil blocks for a meager $7 million and is minting a return of about $7 billion in seven years, approximately a return of 1000 times. On August 16, 2011, miner and a London listed company, Vedanta Resources Plc., led by billionaire Anil Agarwal, announced to buy up to 60% stake in Cairn India for up to $9.6 billion in cash, marking the entry of country’s largest miner in the petroleum and oil business. Vedanta agreed to buy 51 to 60% stake in Cairn India for a consideration of the amount between $8.5 and $9.6 billion in cash in two ways: 1) Vedanta to acquire 31 to 40% interest in Cairn India; at Rs.405 per share (which includes Rs.50 per share as non-compete fee ); and 2) Sesa Goa (which is a subsidiary of Vedanta) to acquire a 20% interest in Cairn India. As a part of the deal, Sesa Goa will make an open offer for another 20% to the minority shareholders of Cairn India at Rs.355 per share. On the basis of the response of the open offer, Vedanta would acquire shares of Cairn India from Cairn Energy PLC. |
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