Cairn Energy Plc today secured the approval of shareholders for sale of majority stake in its Indian arm to London-listed Vedanta Resources for up to $8.48 billion, but the closure of the deal is still contingent on certain conditions.
About 99 per cent of the 94.89 crore shareholders unanimously approved the sale of 40 to 51 per cent stake in Cairn India to Vedanta Group, a Cairn Energy Plc spokesperson said.
"We are pleased that Cairn Energy shareholders have approved the proposed transaction with Vedanta. This is an important step in the process towards completion (of the deal)," he said from Edinburgh where the company's general meeting was held today.
The shareholder approval meant that state-owned Oil and Natural Gas Corporation (ONGC), which partners Cairn India in several of its properties including the giant Rajasthan oilfield, will not be able to to make a counter offer now or exercise its pre-emption right.
But the Cairn-Vedanta deal is far from conclusion. Besides seeking its shareholder approval before October 30, Vedanta Group will have to complete the Indian open offer for the transaction to reach its logical ends.
Vedanta Group is yet to get Sebi's nod for making an open offer to minority shareholders of Cairn India apparently because the market regulator wants the pre-requisite of government consent for the deal to be fulfilled first.
While Vedanta is acquiring 40 to 51 per cent stake in Cairn India at Rs 405 per share, its Indian unit Sesa Goa has applied for approval to make an open offer for an additional 20 per cent in Cairn India at Rs 355 per share, sources said.
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Sesa Goa offer price is sans Rs 50 per share non-compete fee Cairn Energy is charging for keeping away from India, Sri Lanka and Butan for three years.
Sources said Oil Secretary S Sundareshan a few weeks back had written to Sebi chief that Cairn-Vedanta deal was conditioned on government giving its consent to transfer of ownership of assets like the 6.5 billion barrels Rajasthan oilfield, which is at the heart of the $9.6 billion deal.
Sesa Goa Managing Director M Mukherjee today said his firm was awaiting Sebi nod for the open offer. The offer as per the original schedule was to open on October 11 but in all likelihood will miss this timeline.
Sources said the government nod for the deal may not come before November end or December and Sesa Goa may be able to make an open offer only in first quarter of 2011.
The Sale Agreement between Cairn Energy and Vedanta will lapse if conditions are not satisfied or waived on or before April 15, 2011.
Cairn Energy holds 62.38 per cent stake in the Bombay-listed Cairn India.