Cairn India jumps almost 6.0 percent on counterbid reports

24th August 2010, Comments 0 comments

Shares in Cairn India rose nearly 6.0 percent Tuesday on expectations that state-run fuel firms may counterbid against mining group Vedanta's offer for a majority stake in the private oil explorer.

Cairn India, the local arm of Britain's Cairn Energy, rose as much as 5.8 percent, or 20.15 rupees, to a day's high of 363.5 at the Mumbai stock exchange, before edging back to 358.5, up 4.4 percent at 0600 GMT.

Last week, Britain-based mining giant Vedanta announced an offer worth up to 9.6 billion dollars for 51-60 percent of Cairn India, whose most important asset is the oil-rich Mangala field in the western state of Rajasthan.

The Press Trust of India said Monday that state-run companies Oil and Natural Gas Corp (ONGC), OIL India Ltd (OIL) and GAIL have already lined up 10 billion dollars in loan commitments from international banks for a counter-bid.

The three firms have held informal talks as the oil ministry examines legal options to deny Cairn approval for conclusion of its deal, PTI said, quoting sources close to the case.

Sentiment has improved after Cairn India said Monday it struck oil and gas in an onshore block in the Krishna Godavari basin, off India's east coast.

"Cairn India is a sound, long-term story. But investors should wait until there is clarity on (possible) bids," said Gaurang Shah of Geojit BNP Paribas Financial Services.

India's Oil Minister Murli Deora said the government was still undecided on whether to push for a state takeover of oil assets owned by Cairn Energy.

© 2010 AFP

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