Mumbai: In the wake of Cairn Energy forming a panel to secure the interest of minority shareholders in the sale of its Indian interest, its suitor Vedanta on Monday ruled out raising the open offer price for minority stakeholders.
Its open offer itself failed to take off in the absence of clearance from stock market regulator Sebi.
Vedanta is paying up to $8.48 billion for 40-51% stake in Cairn India that operates the country’s largest oilfields, and its group firm Sesa Goa was to make an open offer on Monday for an additional 20% stake at Rs355 a share to minority shareholders of the target firm.
The open offer price is Rs50 less than what Vedanta is offering to Cairn India’s parent Cairn Energy Plc.
“We have given a very lucrative offer and that offer we stand by,” Vedanta chairman Anil Agarwal told reporters in Mumbai, “The price if final.”
He clarified that Rs405 a share offer to Cairn Energy includes a non-compete fee, under which Cairn would not compete with Vedanta in India, Sri Lanka and Bhutan for the next three years.
The Rs50 per share premium was “very important” to Vedanta as “we wanted Cairn India to have exclusivity (in operations) in India and neighbouring countries,” he said.
“Non-compete fee is very important for us because we do not want Cairn Energy Plc to work in our area,” he said.
Cairn Energy recently formed a two-member panel to safeguard the interests of its minority shareholders, after analysts raised concern about the difference in offer price.
Vedanta group firm Sesa Goa could not go ahead with the open offer, for want of approval from regulator Sebi.
Agarwal said Sebi normally takes 45 to 60 days to approve an open offer and the market regulator has made “normal inquiries” that Vedanta has replied. “Without Sebi approval we cannot move forward.”
The deal is contingent on Vedanta completing the Indian offer before 11 April 2011. Shareholders of Cairn Energy Plc, which holds 62.38% stake in Cairn India, last week approved sale of majority stake to Vedanta. London-listed Vedanta Resources is expected to seek shareholder approval by this month end.
Sebi may be holding up the approval for the open offer after oil secretary S Sundareshan wrote to the market regulator stating that the deal was contingent upon government giving its nod for transfer of control of strategic assets like 6.5 billion barrels Rajasthan block. The government approval may come by December, Sundareshan last week stated.
Sesa Goa had filed for open offer on 17 August and Sebi approval “we believe will come in few days here or there,” Agarwal said. “We do not expect any exhorbitant delay.”
He also ruled out taking over royalty payment on crude oil produced from Rajasthan. Currently, state-owned Oil and Natural Gas Corp (ONGC) has to pay royalty on entire crude oil produced from the block even though it has just 30% share of the production.