The UK-based Cairn Energy Plc will tomorrow seek shareholder nod for the sale of majority stake in its Indian arm to London-listed Vedanta Resources for up to $8.48 billion, a development that would close options for state-owned Oil and Natural Gas Corp (ONGC) to make a counter offer.
Cairn has called a general meeting of the shareholders in Edinburgh on Thursday at 1400 hours (local time), industry sources said.
Once the shareholders approve the deal, ONGC will run out of the last opportunity to make a counter offer or exercise its pre-emption right.
Sources said ONGC had so far made no approach to Cairn Energy management.
ONGC could have made a counter-offer or exercised its pre-emption rights in certain properties of Cairn India only before shareholders of Cairn Energy approve of the sale.
Then, upon acceptance of its offer by the management of Cairn Energy, ONGC would have gone to Sebi for stopping Vedanta's open offer for Cairn India shares that is to begin on October 11.
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It had previously missed the market regulator Sebi's deadline for making a rival offer.
Sources said the sale is conditional upon shareholders of Cairn Energy Plc and Vedanta Resources passing a resolution to approve the transaction on or before October 30 and Vedanta Group completing an Indian open offer to minority shareholders of Cairn India.
Also, the deal is conditional upon required government consents.
The sale agreement will lapse if these conditions are not satisfied or waived on or before April 15, 2011.
Sebi is yet to approve Vedanta's open offer and any shareholder nod that Cairn Energy may secure tomorrow would be conditional to completion of the open offer.
Vedanta Group is buying 40-51 per cent stake of Cairn India, which owns the nation's largest onland oil field and has also made an open offer to buy another 20 per cent from the company’s minority shareholders.
According to Sebi’s regulations, a rival offer had to come within 21 days of the open offer being made, i.e. by September 7 but ONGC chose not to make any offer, they said.