Vedanta Resources To Acquire Majority Interest In Cairn India: Strategic Entry to the Indian Oil and Gas Industry - Deal Analysis From GlobalData

Introduction

Vedanta Resources Plc. (Vedanta) entered into a conditional agreement to acquire a 51% to 60% stake in Cairn India Limited (Cairn India), a subsidiary of Cairn Energy Plc. (Cairn Energy). The transaction is estimated to be worth in the range of $8,500m to $9,600m in cash, subject to adjustments. Vedanta will acquire shares from Cairn Energy at a price of (Indian Rupees) INR 355 per share ($7.48 per share) and also pay a non-compete fee of INR 50 per share ($1.05 per share). The offer price represents a premium of approximately 32% to the Cairn India average closing price for 90 days prior to August 14, 2010. Vedanta will fund the acquisition through debt and cash resources whereas Sesa Goa will fund its investment primarily from existing cash balances.

Standard Chartered Bank; Credit Suisse; Goldman Sachs; J.P. Morgan Cazenove and Morgan Stanley are acting as financial advisors to Vedanta for this transaction. NM Rothschild & Sons Limited is acting as the sole financial advisor to Cairn Energy with respect to the transaction. The transaction is expected to close by the first quarter of 201.

Scope

- Rationale behind Vedanta acquiring stake in Cairn India
- Strategic Benefits for the companies involved
- Geography covered -India

Highlights

Reasons to buy

- Develop a sound undestanding of the major M&A's, Partnerships, And Joint Ventures taking place in Asian Oil & Gas industry
- Identify the most lucrative segments to leverage on the growth oppurtunities available in the Indian oil & gas market
- Get a detailed analysis of a deal to enable you to take better decisions

Report Highlights

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TABLE OF CONTENTS

1 Table of Contents 1
1.1 List of Tables 2
1.2 List of Figures 2
2 GlobalData Deal Analysis 3
2.1 Summary 3
2.2 Deal Overview 3
3 Vedanta Resources To Acquire Majority Interest In Cairn India 3
3.1 Deal Overview 3
3.2 Deal in Brief 3
3.3 Vedanta Intends to Diversify its Assets by Acquiring a Stake in Cairn India 3
3.3.1 Sesa Goa’s Overview 6
3.3.2 Terms of the Agreement (Taken From the Agreement Document) 7
3.4 Cairn Energy is Focusing on its Exploration and Drilling in Greenland by Selling its Stake in India 9
3.5 The impact on market prices 11
3.6 Deal Financials and Valuations 11
3.6.1 Companies Involved 11
3.6.2 Deal Financials 12
3.6.3 Deal Rationale 12
3.6.4 Company Valuation Multiples 12
3.6.5 Advisor Information 12
3.6.6 Detailed Target Information 13
3.6.7 Key Financials 13
3.6.8 Detailed Acquirer Information 14
3.6.9 Share Price Information 15
3.6.10 Detailed Vendor Information 15
4 Appendix 16
4.1 About Energy eTrack 16
4.2 Methodology 16
4.2.1 Coverage 16
4.2.2 Secondary Research 17
4.2.3 Primary Research 17
4.2.4 Expert Panel Validation 17
4.3 Contact Us 18
4.4 Disclaimer 18
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LIST OF TABLES

1.1 List of Tables
Table 1: Cairn India, Asset Details, 2010 10
Table 2: Companies Involved, 2010 11
Table 3: Financials of the Deal, 2010 12
Table 4: Company Valuation Multiples, 2010 12
Table 5: Advisor Information, 2010 12
Table 6: Target Information, 2010 13
Table 7: Targets Financial Information, 2010 13
Table 8: Acquirer Information, 2010 14
Table 9: Share Price Information, 2010 15
Table 10: Vendor Information, 2010 15
LIST OF FIGURES

1.2 List of Figures
Figure 1: Vedanta, Operations Map, 2010 4
Figure 2: Vedanta, Revenue Details, 2008–2009 5
Figure 3: Vedanta, Revenue Split ($m), 2009–2010 5
Figure 4: Sesa Goa, Operations Map, 2010 6
Figure 5: Cairn India, Operations Map, 2010 9
Figure 6: Cairn India, Revenue Details, 2007–2009 10
Figure 7: Movement in Share Price Growth 11
Figure 8: GlobalData Methodology 16
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