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Vedanta Cairn

Vedanta Cairn

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Published by Amrita Singh

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Published by: Amrita Singh on Sep 02, 2010
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11/22/2010

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VEDANTAVEDANTA-CAIRN

Vedanta Group Acquisition of Controlling Stake in Cairn India

VEDANTA 

Vedanta Resources plc is a diversified metals and mining company with revenues in excess of US$6 billion. based in London.
They are the first Indian manufacturing company to be listed on the London Stock Exchange. They have operating locations in India, Zambia and Australia. They are headquartered in London and have over 30,000 employees including over 8,000 professionals worldwide.   

TRANSACTION HIGHLIGHTS

Vedanta Group to acquire 51% to 60% of Cairn India Limited (³Cairn India´) for an aggregate consideration of approximately US$8.5-9.6 billion in cash. Post completion it is expected that Vedanta Resources PLC (³Vedanta´) will hold 31-40% of Cairn India directly and Sesa Goa Ltd (³Sesa Goa³) will hold 20% Shares acquired from Cairn Energy PLC (³Cairn Energy´) to be acquired at a price of INR355 per share; Vedanta will also pay a non-compete fee of INR50 per share. Transaction to be funded through debt and cash resources Enhances and diversifies Vedanta¶s strong growth pipeline Leverages Vedanta¶s core skills and track record of value creation

CAIRN INDIA

Cairn India is now one of the biggest private exploration and production companies currently operating in India. The company was acquired by Caledonian Offshore Limited in 1988 and was renamed Cairn Energy PLC. Cairn India was listed on 9 January 2007 on the Bombay and National Stock Exchanges. Cairn India currently has a market capitalisation in excess of USD 13 billion, ranking as the third largest oil and gas company in India.

Cairn India·s Asset Base

CAIRN INDIA:Sales And Growth

Transaction Highlights

Cairn to sell a maximum of 51 per cent of Cairn India to Vedanta Consideration of up to US $8,480m (INR 396,561m), based on US $8.66 (INR 405) per Cairn India share. A premium of approximately 32 per cent to the Cairn India average closing price for 90 days prior to 14 August 2010 Put and call options, exercisable after July 2012 and July 2013, to ensure a majority interest in Cairn India can be sold (exercisable at US $8.66 (INR 405))

Intention to return a substantial proportion of the proceeds from the transaction to Cairn shareholders Retained cash will provide Cairn with financial flexibility to pursue an active exploration programme in its leading acreage position in Greenland and future growth opportunities Continued exposure to Rajasthan through the retained shareholding in Cairn India Completion expected before end of 2010

Reasons for the Proposed Transaction

A unique investment: the Indian natural resources champion meeting the needs of a growing economy. Enhances and diversifies Vedanta·s strong growth pipeline. Cairn India is a world class asset.

Transaction Financing
Transaction consideration of US$8.5bn to US$9.6bn Payable on completion (expected by Q1 2011)

Funding Vedanta Resources: bank debt facilities of up to US$6.5bn, • 2 year tenure Sesa Goa: c. US$3bn, primarily from cash resources

Unique Opportunity to Create Value

Creating an Indian natural resources champion: comprehensive footprint across India¶s resources sector. World class asset and management team. Leverages Vedanta¶s core skills. Enhances and diversifies Vedanta¶s strong growth profile. Financial flexibility retained and no impact on existing expansion programmes.

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