India’s Vedanta Resources has said it will acquire a 51 to 60 per cent stake in Cairn Energy’s Indian unit for between £5.4 billion to £6.1 billion.
The move represents Vedanta's first foray into oil and gas, and will help Edinburgh-based Cairn Energy fund a drilling programme in Greenland.
Cairn India operates the country’s largest onshore oil field, and has a market value of approximately £8.6 billion.
Cairn Energy holds a 62 per cent stake in the unit, while Petronas, Malaysia's state-controlled oil company, owns 14.9 per cent. Some of the remaining shares are listed on the Mumbai stock exchange, and Cairn Energy chief executive Bill Gammell owns about 0.5 per cent. Other backers include the US fund manager BlackRock.
Cairn is expected to retain an 11 per cent stake in the unit.
Cairn is currently drilling exploration wells off the coast of Greenland through its Capricorn subsidiary. It is thought that the region may hold 50 billion barrels of crude and gas—enough to meet Europe’s energy demand for almost two years.
Vedanta, India’s biggest copper producer, said in 2008 it planned to spend $20 billion in India on mines and power plants over four years.
The company has so far concentrated its efforts on metals such as zinc, copper, aluminium and iron ore but now plans to expand into the oil and gas market. It is planning to secure oil and gas to fuel the power plants it controls in India, which are currently fired by coal.
Headquartered in London, Vedanta employs 30,000 people. It posted a net income last year of approximately £384 million.
Cairn Energy has operational offices in Dhaka, Chittagong, Kathmandu and Tunis, aside from its Edinburgh headquarters. In 2009 it posted profits of approximately £33.6 million.
