Vedanta gets nod from India on Cairn takeover
London-listed mining group Vedanta Resources on Monday said it has received formal conditional approval from the Indian government for its takeover of Cairn Energy's India unit.
The group, led by Indian-born billionaire Anil Agarwal, said in a statement it was now working to meet the conditions that the Indian government has set for its takeover of Cairn India.
"Vedanta is working with (British oil explorer) Cairn Energy to satisfy these conditions and complete this transaction," a statement said.
The approval came with a key rider that Cairn India and India's state-owned Oil and Natural Gas Corp (ONGC) share the burden of royalty payments on crude production from their Rajasthan fields.
ONGC owns a 30 percent stake in the block but pays royalties on 100 percent of the output under a "royalty holiday" scheme dating from the 1990s aimed at promoting private oil exploration in energy-hungry India.
"Vedanta notes that Cairn India plans to seek a shareholder approval for the conditions imposed by the government of India," the miner said.
Cairn India has strenuously objected to the royalty payment sharing, saying such a step will sharply cut its profits.
But analysts expect Cairn shareholders to give their nod to the deal which Vedanta first proposed last August to add to its numerous India-focused mining assets.
The sale has been beset by difficulties caused by deep differences between Cairn and ONGC over the royalties issue.
The formal transaction process is expected to be completed within the next couple of months, according to Vedanta.
Vedanta has so far built up a 28.5 percent stake in Cairn India. It wants government approval to buy another 30 percent stake in Cairn India from Cairn Energy. Cairn Energy currently owns a 52 percent stake in Cairn India.
© 2011 AFP