Vedanta buys 11 per cent in Cairn India through back door

British metals and mining conglomerate Vedanta Resources – whose attempt to buy Cairn Energy's Indian assets has got bogged down in a political and bureaucratic quagmire - has nonetheless bought an 11-per cent stake in Cairn India Ltd for about $1.5 billion through its Indian subsidiary Sesa Goa, reports today said.

The stake purchase was made possible after Malayasia's state-owned oil and gas exploration company Petronas Nasional sold its entire 14.9-per cent stake in Cairn India through block trades. Domestic and foreign institutions bought the remaining 3.9 per cent stake Petronas said. The total value of the transaction has been pegged at Rs9,340 crore ($2.1 billion).

Cairn India, for which the Anil Agarwal-controlled Vedanta has made a bid worth around $9.6 billion (Rs42,624 crore), saw about 282.3 million shares change hands in three transactions today. A total of 277.27 million shares were traded at Rs331 each in two block deals on the Bombay Stock Exchange while another 5.07 million shares were bought at Rs335 each, according to Bloomberg.

On 16 August 2010, Cairn Energy had announced a conditional agreement with Vedanta for the sale of a maximum 51 per cent of the fully-diluted share capital of Cairn India in an all-cash deal. Shareholder approval from both parties has been obtained for the transaction, but the companies await Indian government approval.

Vedanta said earlier this month that it has received clearance from the Securities and Exchange Board of India to send letters of offer to Cairn India shareholders and proceed with its open offer for up to 20 per cent of the shares of Cairn India, as mandated under Indian takeover laws.

Vedanta is the largest non-ferrous metals and mining firm in India based on revenues. With multinational assets and operations, it is primarily engaged in copper, zinc, alumina and iron ore businesses. Recently, it has ventured into commercial power generation.

Cairn India has interests in a total of 11 acreage blocks in India and Sri Lanka, and its principal asset is a 70-per cent stake in the Rajasthan oil fields, India's biggest on-shore find.

Cairn currently produces about 125,000 barrels of crude oil per day. According to Vedanta, there is potential to more than double this level to around 240,000 barrels per day, representing about 25 per cent of India's production.