Acquisition of Cairn India by Vedanta - Biggest Deal in Indian Oil Sector

Code : FCF0017

Year :
2011

Industry : Oil and Natural Gas

Region : Netherlands, Europe

Teaching Note:Not Available

Structured Assignment :Not Available

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Abstract: The case study discusses the biggest deal in Indian oil sector in which miner and London listed company, Vedanta announced to acquire up to 60% stake in oil and gas exploration company Cairn India for $ 9.6 billion. As a part of the deal, Sesa Goa which is a subsidiary of Vedanta has to acquire 20% (part of 60% above) stake in Cairn India by making an open offer.

State-run company Oil and Natural Gas Corporation (ONGC), being a joint venture partner in eight out of ten oil blocks of Cairn India does not accept the deal and reserves pre-emption rights.

The case study gives an opportunity to discuss how stakes of many parties (directly or indirectly involved) are at stake in such a big deal. The case study also gives an opportunity to discuss corporate governance issues and governmental hurdles. The case study also questions on the synergies in such an expensive deal.


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Pedagogical Objectives:

  • To understand Mergers and Acquisition (M&A) terminology such as merger, acquisition, takeover, open offer, spin off, etc.
  • To understand various issues and challenges in M&A.
  • To understand how a big M&A decision can affect the interest of various parties in a significant manner.
  • To understand the synergies behind M&A and to analyze the synergies in the present case.
  • To understand and analyze various corporate governance issues relating to acquisition like interest of minority shareholders, unethical use of cash resources of subsidiary company by holding company to finance the deal, payment of high premium in the deal, etc.


    Keywords : Acquire; Production Sharing Contracts; Balco; Anil Agarwal; NYSE; Sterlite; Cairn Energy; Sesa Goa; Non-compete fee; Tender Offer; SEBI; Minority Shareholder; ONGC; Royalty

    Contents :
    Vedanta: An Overview
    Cairn India
    Acquisition Move by Vedanta to Acquire Stake in Cairn India


    Case Introduction >>


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