Never shy to take on the odds, the Anil Agarwal-managed, London-based Vedanta Resources on Monday entered the oil sector, announcing that it will acquire 51-60 per cent stake in Cairn India, ruffling feathers of state-owned Oil and Natural Gas Corporation (ONGC), which holds 30 per cent in the company.
This $9.6 billion (Rs 45,000 crore) transaction would be the third-largest international business deal where an Indian company or its promoter is involved — the largest two being the $13.1 billion state sale of Hutchison Essar to Vodafone and the $11.94 billion purchase of Corus by Tata.
Vedanta will buy the stake in 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 has a 30 per cent stake — said it may take legal action.
The markets remained sceptical about the deal, with Sesa Goa’s share price crashing 8.9 per cent to Rs 323 a share and Cairn India, after hitting a 52-week intra-day high 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,” he said. “The acquisition can also position Vedanta as an Indian oil major.”