Vedanta snaps up 11% of Cairn India from Petronas for $ 1.5 b

Wednesday, 20 April 2011 00:00 - - {{hitsCtrl.values.hits}}

MUMBAI, April 19 (Reuters) - Vedanta Resources Plc bought an 11 percent stake worth about $1.5 billion in Cairn India , a source said, in a move that guarantees the miner a majority stake in the Indian unit despite an expected tepid response to its open offer.

The India-focused miner’s $9.6 billion deal to buy 40 percent to 51 percent stake from Cairn Energy is yet to be cleared by the Indian government and it aims to buy a further 20 percent through an open offer.

Vedanta’s move to acquire Cairn India is part of London-based mining magnate Anil Agarwal’s plans to grab a slice of India’s oil reserves and get exposure to surging demand.

Analysts said Vedanta’s share purchase in Cairn India on Tuesday would be useful if it fails to get a big response from minority shareholders for its open offer.

“This is a strategic move by Vedanta and it makes the open offer inconsequential,” said Jagannadham Thunuguntla, head of research at brokerage SMC Global Securities.

“Vedanta will now be able to get a comfortable controlling stake in Cairn India even if the open offer response is very poor,” he said. “But all this is subjective to the government clearing the deal and that is an unknown factor.”