The Anil Agarwal-managed, London-based Vedanta Resources entered the oil sector on Monday, announcing that it would acquire 51-60 per cent stake in Cairn India, ruffling the feathers of state-owned Oil and Natural Gas Corporation (ONGC), which holds 30 per cent in the company.
This $9.6 billion (approx Rs 45,000 crore) transaction will be the third-largest international business deal where an Indian company or its promoter is involved - the two bigger ones being the $13.1 billion (Rs 59,000 crore) state sale of Hutchison Essar to Vodafone and the $11.94 billion (Rs 54,000 crore) purchase of Corus by Tata.
Vedanta will buy the stake in a mix of two transactions - a direct purchase from the UK-based Cairn Energy PLC (the parent firm of Cairn India), and an open offer to Cairn India's shareholders for a 20 per cent stake.
Depending upon the success of the open offer, Cairn Energy will offload 40-51 per cent stake. Vedanta Resources itself will pick up 31-40 per cent stake while its group company Sesa Goa will buy 20 per cent.
ONGC - sulking because Vedanta has no experience in the oil sector and may not add value to Cairn India, which operates the Barmer oil fields where ONGC is a 30 per cent stakeholder - said it could look at taking legal action.
The markets too remained sceptical about the deal, with Sesa Goa's share price crashing 8.9 per cent to Rs 323 per share and Cairn India's tanking 6.4 per cent to close at Rs 333. True to his indomitable self, the school dropout Agarwal remained unfazed.
"We were a small base metal producer, with ambitions of becoming an international player in all the natural resources," he told reporters over a morning conference call.
"This acquisition can also position Vedanta as an Indian oil major."