Cairn finalises India stake sale to Vedanta
Britain's Cairn Energy has finalised selling a controlling stake in its Indian unit to mining giant Vedanta, after protracted wrangling over royalty payments.
The company said in a statement to the Bombay Stock Exchange in Mumbai on Wednesday that Vedanta "has confirmed that it has now satisfied the conditions" to take a majority shareholding in Cairn India.
"Cairn will now retain an approximate 22 percent shareholding in Cairn India," the statement added.
The Indian government gave London-listed Vedanta Resources conditional approval for its planned takeover of Cairn India in late June, nearly a year after it was first proposed.
But the approval came with a rider that Cairn India and India's state-owned Oil and Natural Gas Corp (ONGC) share royalty payments on crude production from their Rajasthan oil fields.
ONGC owns a 30 percent stake in the oil block but has paid royalties on 100 percent of the output under a "royalty holiday" scheme aimed at promoting private oil exploration in energy-hungry India.
Cairn objected to the royalty payment sharing, saying such a step would sharply cut its profits but it finally accepted the terms. The royalty obligation is estimated at around 15 percent of revenue.
Vedanta had built up a 28.5 percent stake in Cairn India and wanted approval to buy another 30 percent stake in Cairn India from Cairn Energy.
© 2011 AFP