Vedanta Group Acquisition of Controlling Stake in Cairn India


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 Vedanta Resources plc is a diversified metals and mining company with revenues in excess of US$6 billion. based in London. 



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 fourth 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 1st quarter of 2011

Reasons for the Proposed Transaction

A unique investment: the Indian natural resources champion meeting the needs of a growing economy

Leverages Vedanta·s core skills

Cairn India is a world class asset

EPS accretive

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 Common operating philosophy: focus on delivery and costs Enhances and diversifies Vedanta¶s strong growth profile. Financial flexibility retained and no impact on existing expansion programmes Immediately EPS accretive for shareholders

Questions to be Answered 

Why the deal? Why enter a different market? Is the deal expensive? What are the problems faced by ONGC? Credibility of Vedanta questioned? Problem with Sesa Goa and minority share holders? Why only Sesa Goa? Problems from the government side.

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